2015 Lotte Chemical Sustainability Report2 PDF

LIFE
VALUE
CREATOR
2015 Sustainability Report
About this Report
This is Lotte Chemical’s ninth annual sustainability report. We provide this report as a
response to our stakeholders’ interest and demand for topics related to the economy,
environment, and society. We will continue to publish the report every year in order to
provide information about our sustainability management performances and to utilize
it as a communication channel with diverse stakeholders.
Introduction
This Report covers Lotte Chemical’s sustainability performances and activities from
January 1 through December 31, 2015. To provide a better understanding for achieve-
ments with quantitative results, data from the last three fiscal years are also enlisted
for stakeholders to grasp the market trend. Year-on-year data is based on December 31
of each fiscal year and some data with period gap are reported with additional state-
ments.
Reporting Principle
The 2015 Lotte Chemical Sustainability Report was written according to the Core Op-
tion of the GRI (Global Reporting Initiative) G4 Guideline. Detailed indicators and re-
porting contents based on the recommendation of GRI Index are stated on pages 82
through 85.
Reporting Scope
This report covers sustainability management activities and performances of Lotte
Chemical’s headquarters in Seoul, Daejeon Research Institute, Yeosu Plant, Daesan
Plant, and Ulsan Plant. Our subsidiaries and overseas plants are also mentioned with
respect to some issues. Financial data in this report was drawn up on the basis of con-
solidated financial statements (K-IFRS).
* ‌Some data related to the petrochemical business acquired from Samsung affiliates are included in our
sustainability report from this year.
Assurance
An independent and objective Assurance Institution verified the credibility of the con-
tents in this report, and the results are stated on pages 88 through 89.
This report can be accessed on the website of Lotte Chemical (http://english.lottechem.

com). For any inquiries or additional information, please refer to the following contact
point. We are always open for your opinion.
Corporate Communication Team of Lotte Chemical

11F, 51, Lotte Tower, Boramaero 5-gil, Dongjakgu, Seoul
Tel: +82-2-829-4114
E-mail: csr@lottechem.com
Contents
04 Letter from the CEO
04 Overview
06 About Lotte Chemical
08 Introduction of Business
10 Lotte Chemical in Your Everyday Life
16 Lotte Chemical’s 40-year History

14 Business
Highlight
20 ‌Acquiring the Petrochemical Business of
Samsung Affiliates
22 ‌Strengthening Global Business
Competitiveness
24 Research and Development
30 Governance
28 Basis on
Sustainability 32 Sustainability Management System
34 Risk Management
36 Ethical Management
38 Activating Stakeholders’ Engagement
40 Materiality Test
44 Issue 1 Environment
42 Material
Issues 52 Issue 2 Safety
56 Issue 3 Labor & Human Rights
66 Issue 4 Supply Chain Management
70 Issue 5 Customer Value
74 Issue 6 Social Contribution
82 GRI G4 Index
81 Appendix
86 Lotte Chemical’s Declaration of Human Rights
87 Accolades and Membership of Association
88 Independent Assurance Report
90 Consolidated Financial Statements
92 Production Capacity of Main Products
93 Sustainability Data
LOTTE CHEMICal 2015 Sustainability Report
Letter from the CEO
I would like to ask for your support and interest in Lotte Chemical as we
advance to become a “Global Top 10 Chemical Company”, growing
beyond the development of the last four decades.
04
Overview Letter from About Introduction Lotte Chemical in Your
the CEO Lotte Chemical of Business Everyday Life
Dear valued stakeholders!

This year is very meaningful as it marks the 40th anniversary of the establishment of Lotte Chemical. We started by taking a step in
Yeosu Petrochemical Complex forty years ago with the help of hard-earned overseas capital and, we have now grown to a global
chemical firm that leads a number of domestic and overseas subsidiaries. All credit for this sea change goes to the support and inter-
est from the stakeholders. I would like to extend my heart-felt appreciation to all of you, stakeholders.
On the occasion of the 40th anniversary, Lotte Chemical set up a “Global Top 10 Chemical Company” as a new corporate vision. To re-
alize the goal, we are actively working on sustainable management. We have published sustainability report every year and utilize it
as a communication channel with external stakeholders.
Capitalizing on the capability and experiences accumulated during the history of us, we struck strategic large-scale M&A deals that en-
abled us to realize the economy of scale. We also take pride in our technological prowess, strong enough to build overseas plants on our
own. In particular, we have grown to a comprehensive chemical firm, by securing the capabilities of producing diversified products from
petrochemical-based materials, including of olefin and aromatic series, to functional resin. Now, we are leading the Korean petrochemi-
cal industry through the development of high value-added products , which are also environmental-friendly . These products are the re-
ward for our continued R&D efforts and brought us an excellent business result last year.
In the meantime, the current business environment calls for new challenges and innovation from Lotte Chemical. Continued low oil
prices, possible interest rate hikes of the US and the slowing growth of the Chinese economy that is the biggest demand source are
our major risk factors. In addition, domestic petrochemical players that use low-cost feedstock are waging ever-fiercer competition
against each other, while refineries are expanding their presence to the petrochemical business. China has also been increasing its
self-sufficiency, and leading companies are accelerating the pace of technology monopolization. All these are aggravating difficulties
in business.
To tackle these challenges, Lotte Chemical made its initial foray into the synthetic rubber business through partnership. In addition,
we secured an opportunity to diversify our business portfolio via the acquisition of chemical businesses of Samsung affiliates chemi-
cal businesses , which can help bolster both the engineering plastic business and the fine chemical business. As an effort to make di-
versifications in the feedstock supply chain, we completed the construction of a chemical complex in Surgil, Uzbekistan. In addition,
we are implementing the US shale gas-based project as well as the joint venture project with Hyundai Oilbank as planned.
We are making all-out efforts to develop environmentally friendly technology, by fortifying research not only on products of existing
businesses, but also on megatrends that center on water processing, energy storage system (ESS) and bio products.
Globally, corporate social responsibility that is mainly about environment and safety, ethical management, mutual growth and
co-prosperity with local community does not end in an obligation that a company has to fulfill. It is a factor that determines the life
and death of a business. All employees of Lotte Chemical put environment and safety ahead of anything else and strengthen corre-
sponding efforts. The company also makes efforts to use energy efficiently and minimize greenhouse gas emissions and environmen-
tal degradation. For ethical management practice, we run the ethical management system under which we hold weekly ethical man-
agement education and operate “Shinmungo”, all of which is designed to establish transparency and fairness in transactions. To grow
with partners, we are running Mutual Growth Fund and are actively working on supportive steps that strengthen their competitive-
ness, including Mutual Growth Academy and technological support. We are also carrying out various activities which have been con-
ceived to develop with local communities, including book donations to schools in our region, volunteer services for home repairs and
local talent employment.
Going forward, Lotte Chemical firmly promises to faithfully serve its due role as a social enterprise, listening to the voices of different
stakeholders with an open mind, and reflecting them actively in our business.
We ask for your interest in and support to Lotte Chemical as we proceed on our vision of becoming a “Global Top 10 Chemical Compa-
ny”, growing beyond the development of the last four decades.
Lotte Chemical will be a company that is respected and entrusted through active communications with stakeholders, based on its
sustainability management.
May, 2015
President & CEO, Lotte Chemical Corp.
Huh Soo-young
05
About Lotte Chemical
Life Value Creator

Lotte Chemical, as a top-tier chemical company in Asia, is committed to creating a better and hopeful tomorrow.
Russia
UK
Poland
Uzbekistan
Korea
Turkey
Japan
China
Pakistan Hong Kong
Vietnam
Malaysia
Singapore
Indonesia
General Information
Company name Establishment Head Office
3.16
Lotte Chemical 51, Boramae-ro 5-gil, Dongjak-gu,
Corporation
March 16, 1976 Seoul(Sindaebang-dong)
CEO Industry Main Products
Resin Product (PE, PP, PC, PET, EVA),

Shin Dong-bin, Basic Petrochemicals (EG, SM, PTA, PIA),
Petrochemical Industry
Huh Soo-young Basic Chemicals (BD, BZ, TL, XL)
Total assets (‌Based on consolidated Sales (‌Based on consolidated No. of employees

financial statements) financial statements)
KRW 11,467.8 billion KRW 11,713.3 billion 2,800 persons
06
Head Office, Plant, R&D Institute Overseas Subsidiaries Overseas Branches
US
HQ in Seoul
Daesan
Plant Research Institute
Ulsan Plant
Yeosu Plant
Peru
Global Network
Worksite Subsidiary & Joint Venture Overseas Subsidiary Overseas Branch
Head Office Seoul Lotte MRC Daesan LC Shanghai Trading Shanghai, Japan Tokyo
Research Institute Daejeon SEETEC Daesan China USA Houston
Plant Yeosu·Daesan·Ulsan KP Chemtech Ulsan LC Gaheung Zhejiang, China Hong Kong Hong Kong
Sales Branch Daejeon·Daegu· Sambark LFT Yesan·Asan LC Gaheung EP Zhejiang, China Russia Moscow
Busan DACC Aerospace Wanju LC Hefei EP Anhui, China Turkey Istanbul
Lotte Mitsui Chemical Yeosu LC Shenyang EP Liaoning, China Vietnam Ho Chi Minh
Lotte Versalis Elastomers Yeosu LC Sanjiang Zhejiang, China Peru Lima
LC Titan Johore, Malaysia,
Jakarta, Indonesia
LC Alabama Alabama, USA
LC UK Wilton, UK
LC PL Karachi, Pakistan
LC Poland Warsaw, Poland
LUSR Malaysia
LC USA Delaware, USA
LACC Louisiana, USA
LCLA Louisiana, USA
07
Introduction of Business
Company Information
Since its establishment in 1976, Lotte Chemical has grown to a leading chemical company in Korea, securing a stable and profitable
business portfolio through continuous facility expansion and business expansion. We are currently operating world-class production
plants in Yeosu, Daesan, and Ulsan. Our flagship products include HDPE, LLDPE, EVA, PP, functional resin, EG, SM, BD, PET and PIA.
Quality recognition on these products led to exports to more than 110 countries throughout the world. Our efforts in M&A and devel-
oping overseas markets allowed us to supply quality products to more countries. In addition, by launching a Chinese subsidiary and
branches in Hong Kong, Japan, Peru, Russia, the US and Vietnam, Lotte Chemical is putting spurs to sharpening its competitive edge
in global areas. To become a “Global Top 10 Chemical Company”, the company is committed to advancing itself to be a top-tier player
in an industry that considers enhancing the value of life and the harmony with environment.
VISION 2020
Lotte Chemical is opening the chapter of a prosperous future, based on trust to humans and love of nature. Leveraging the unwaver-
ing spirit of creation and the unswerving attitude of challenge, we have evolved to a leading company. Under the VISION 2020 laid out
in 2016, the company is taking a big step to be a “Global Top 10 Chemical Company”.
Diversification of raw materials

Enhancing cost competitiveness and profitability
• ‌Launching local ECC to source low-cost materials
• ‌Building additional NCC facilities at home and Global Top 10
abroad
Chemical Company
Diversification of business portfolio Selecting and promoting new businesses

Mitigating profit fluctuations and increasing profitability Securing future growth engines
• ‌Enhancing the integration of olefin (additional derivatives) • Promoting
‌ the entrance into ESS and
• ‌Expanding business area to functional materials and fine water treatment sectors
chemical sector • Selectively entering relevant businesses
VISION 2020 To-be Key Practices in 2016
Developing and managing

Securing future Upgrading R&D competency
new businesses
Diversifying business growth engines by
Diversifying raw
portfolios by entering entering ESS, water
materials by Committing to safety and Strengthening response
fine chemical treatment, and
sourcing low-cost environmental management to market changes
business centered on relevant businesses
materials
olefin led by enhancing R&D
Realizing ethical management and
competency Cultivating global talents
social responsibility
Management Policies
Enhancing Core Field-oriented Developing Green Brand

Capability Management Talents Management Management
Focusing capabilities on Listening to voices of local Recruiting talented Supplying eco-friendly Evolving into a global
businesses that provide communities and human resources and products through premium brand by
competitive edge and reflecting them in our developing them as reducing energy use and providing customers with
expanding the horizons to businesses global talents to lead our innovative management products and services to
relevant areas future growth to fulfill our social maximize their
responsibility satisfaction and trust
08
Daesan Plant
Domestic Worksites and

Research Institute
Research Institute
Lotte Chemical has three different plants in Yeosu, Daesan
and Ulsan, and Lotte Chemical Research Institute in
Daeduk Research Complex. Located in the major petro-
chemical complex in Korea, these three mega-plants are
actively taking advantage of their competitive edges in
terms of logistics and locally specialized products.
Ulsan Plant
Korea’s first plant that

realized the capacity of
1 million ton of NCC. Yeosu Plant
employees
525 persons
Bolster competitiveness of
The acquisition of Hyundai Petro- products and lead the efforts
chemical in 2003 brought this plant of mining new growth
to Lotte Chemical. Since the busi-
engines researchers
ness deal, the firm greatly increased
its production capacity by expanding
NCC lines. The plant is now a record
346 persons
The starting point of the
holder for energy optimization by
business unit and duration of oper- The institute was founded within petrochemical business of
ating days without an accident. The Yeosu Plant in 1986, before being Lotte Chemical
plant is expected to jump to a higher moved to its current location in
Daeduk in 1991. In 2005, it became employees
level as scheduled construction of
EOA and MX production lines is ex- an integrated research home for 858 persons
pected to bring an additional growth. Lotte Daesan Petrochemical, KP
Chemical and Lotte Chemical after
Yeosu Plant began its operation in
A vertically integrated plant
their merger. for aromatic products
1979 and has produced synthetic
Now, the research center is strength-
resin, basic petrochemicals and ba-
ening the competitiveness of existing
sic chemicals. The plant plans to
products, by developing polyolefin, employees
strengthen its global and domestic
engineering plastic and functional
competitiveness not only through 439 persons
new materials and is taking the lead
expanding business scope and scale,
in mining a new growth drive via
which would be possible by adding
studying megatrends. Ulsan Plant built on own plant tech-
new lines to existing capacity and
building new plants, but also by es- nology has installed an efficient pro-
tablishing a vertical integration that duction process which is consolidat-
will be an edge in the international ed with one pipe line. The plant is
business. vertically integrated so that raw ma-
terials of aromatic products can be
made into final products in the plant
itself.
09
EPP EVA
PET TPE
PC BD
EG LDPE
10
EPP (Helmet)
A s the PP composite resin with improved functions of

polypropylene, EPP is toxic free and boasts strong durability and
insulation. It is used for automotive parts such as bumper, airbag
PP SM
cover, dashboard, helmet, and home appliances where safety and
durability are required. More industrial applications are adopting
EPP.
PET (Water bottle)
The well-known plastic bottles that we consume in our daily lives

are made of PET, a type of plastic substance. PET is mainly used
for food and beverage containers and it is recyclable which makes
it very eco-friendly. PET is toxic-free as well as lightweight and can
be easily shaped. Also, as PET is highly economical, it is rapidly
replacing glass bottles and aluminum cans.
EVA (Shoes)
EVA is a form between rubber and plastic. It is largely used for

producing soles for running shoes because it is soft, absorbs
shock, and effective for thermal insulation. Moreover highly
concentrated EVA has superior adhesive properties and therefore
is used as a material for high-quality adhesives.
BD (Tire)
Butadiene (BD) is mainly used as the raw material of synthetic

rubber for manufacturing tire, rubber hose, and diverse industrial
products. It is colorless and exists as a gaseous state at room
temperature.
TPE (Earphone Cord)

LDPE PC
TPE is a highly utilizable plastic material due to its characteristic
of being elastic at room temperature and being formable at high
temperature. Its low density makes product lightweight. It is
actively used for producing automobile components because it
has a soothing texture and is easy to color. Non-electrical
conduciveness makes it ideal for electrical wire cable.
PC (Cellular phone)
PC is a plastic material with high intensity, heat resistance, and

shock resistance. Being highly transparent and toxic-free, it is
mainly used for electronic parts, machinery parts, compact disk,
DVD, automotive headlamp, and sound wall.
PET EPP
EG (Clothes)
Commonly spotted on clothing tags, EG is a major material for

synthetic textiles and polyester. EG reacts to terephthalic acid to
create polyester. Also, EG with low freezing point is used as
antifreeze for automobile.
LDPE (Billboard in subway)
LDPE is a part of polyethylene resin. It is easily modifiable,

resistant to moisture as well as water, and highly transparent.
Because of its characteristics, it is used for agricultural products,
packaging film, wire clothing, and variety of wrap products. The
thin plastic that covers advertisement billboards at subway
stations or on roads is made of LDPE.
11
PP (Clear File)
Polypropylene has various strengths including high heat

resistance, shock resistance, transparency, and chemical agent
EPP resistance. It is widely
EVA used for automobile plastic materials,
home electronic appliances, disposable syringes, various
transparent containers, sanitary staple fiber, packaging film, etc.
SM (Notebook Cases)
SM is a colorless substance made of ethylene and benzene. SM is

material of PS, ABS. PS resin is often utilized to produce stationary
items and toys, and ABS resin is used for electronic appliances.
SM is also used as a base material for paint.
LDPE (Paper Cup)
LDPE is a part of polyethylene resin. It is easily modifiable,

resistant to moisture as well as water, and highly transparent.
Because of its characteristics, it is used for agricultural products,
packaging film, wire clothing, and a variety of wrap products. The
PET TPE substance coated on paper cups to prevent them from leaking is
also made with LDPE.
PC (Ball-point Pen)
PC is a plastic material with high intensity, heat resistance, and

shock resistance. Being exceptionally transparent and toxic-free,
it is mainly used for electronic parts, machinery parts, compact
disk, DVD, automotive headlamp, and sound wall.
PET (Disposable Packed Lunch)
PC BD The well-known plastic bottles that we consume in our daily lives

are made of PET, a type of plastic substance. PET is mainly used
for food and beverage containers and it is recyclable which makes
it very eco-friendly. PET is toxic-free as well as lightweight and can
be easily shaped. Also, because PET is highly economical, it is
rapidly replacing glass bottles and aluminum cans.
EPP (Plastic Footholds)
As the PP composite resin with improved functions of polypropylene,

EPP is toxic-free and boasts strong durability and insulation. It is used
for automotive parts such as bumper, airbag cover, dashboard,
helmet, and home appliances where safety and durability are
required. More industrial applications are adopting EPP.
EG LDPE
10
PP SM
LDPE PC
PET EPP
11
LottmerᆞTPOᆞTPOᆞLFT
PMMA HDPE
EOA
12
Lottmer (Wiper)
Lottmer is TPEV ( Thermo-Plastic Elastomer Vulcanized) material

developed by Lotte Chemical’s own technology. It has the
elasticity of thermosetting rubber and deformability of
HDPE PIA
thermoplastic resin. It can substitute soft PVC or thermosetting
rubber and make products lighter due to its low specific gravity.
TPO (Front Bumper)
It is made by mixing reinforcement materials with thermoplastic

resins PP or PE and boasts improved mechanical property and
functionality which cannot be found in general-purpose resins. It
is used for parts requiring excellent dimensional stability or for
products demanding lightweight property such as interior
material, exterior material for automotive, construction material,
and other industrial materials.
TPO (Door Trim)

WPC
It is made by mixing reinforcement materials with thermoplastic
resins PP or PE and boasts improved mechanical property and
functionality which cannot be found in general-purpose resins. It
is used for parts requiring excellent dimensional stability or for
products demanding lightweight property such as interior as well
as exterior materials of automobiles, construction materials, and
other industrial materials.
LFT (Rear Bumper Beam)
LFT is made by mixing plastic and special fibers, and boasts

excellent mechanical properties, dimensional stability, and
thermal resistance properties. Lotte Chemical first developed LFT
by applying its original fiber impregnation technology in the
industr y. It is used for interior and exterior materials of
automobiles due to its excellence in transformation.
SM / EPP
PMMA (Upper Deck of Sink)
PMMA is also known as acrylic resin. It is transparent and weather

resistant. Because PMMA is easy to color, it is used as a material
for organic glass, electrical parts and construction material.
HDPE (Chopping Board)
HDPE is a type of polyethylene resin. It is modifiable, resistant to

both low and high temperatures and damage. It is also very easy
to process. Because of these traits, it is used for producing
household containers, fish nets, ropes, insulated cables, chemical
containers, automobile fuel tanks, pipes, and films for agricultural
ᆞindustrialᆞpackaging purposes.
EOA (Dishwashing Detergent)
EOA is used as a material for detergents, shampoos, personal

hygiene products, and emulsifiers. Recently, it is being used as an
additive to enhance the strength of concrete in the construction
industry.
13
HDPE (Shampoo Bottle)
HDPE is a type of polyethylene resin. It is modifiable, resistant to

both low and high temperatures and damage. It is also very easy
LottmerᆞTPOᆞTPOᆞ LFT to process. Because of these traits, it is used for producing
household containers, fish nets, ropes, insulated cables, chemical
containers, automobile fuel tanks, pipes, and films for
agriculturalᆞindustrialᆞpackaging purposes.
PIA (Bathtub)
PIA is the raw material for producing PET bottles, adhesives, coating
agents, and paint for vehicles. It is a high value-added and technology-
intensive product , which is manufactured only by 7 companies from
7 countries, which include US, Japan, Spain, Singapore, and Korea.
Lotte Chemical became the world’s 5th PIA developer and is the only
company that can currently produce PIA in Korea.
WPC (Chairs)
WPC (Wood Plastic Composite) material has the advantages of

both wood and resin. It is suitable for highly functional
constructive materials due to its great durability, insulation, eco
friendliness, and excellent deformability.
SM (TV housing)
SM is a colorless substance made of ethylene and benzene. SM is

material of PS, ABS. PS resin is often utilized to produce stationary
items and toys, and ABS resin is used for electronic appliances.
SM is also used as a base material for paint.
PMMA HDPE
EPP (Artificial Leather Sofa)
As the PP composite resin with improved functions of polypropylene,

EPP is toxic-free and boasts strong durability and insulation. It is used
for automobile parts such as bumpers, airbag covers, dashboards,
helmets, and home appliances where safety and durability are
required. More industrial applications are adopting EPP.
EOA
12
HDPE PIA
WPC
SMᆞEPP
13
Business Highlight
Lotte Chemical is taking an energetic step toward the global stage to
shape a better future as Korea’s representative chemical company.
16 Lotte Chemical’s 40-year History 22 Strengthening Global Business
Competitiveness
20 Acquiring the Petrochemical 24 Research and Development
Business of Samsung Affiliates
Lotte Chemical’s 40-year History
Challenge, Innovation, and Take-off 1989.02
1970-1990 Achieved 4.6 million man

hour accident-free worksite
Starting Petrochemical Business 1989.04
The Beginning
1988.04
Held a ceremony for the

Completed
completion of the 2nd PE
the SPE plant
& PP plant
1988.11 1991.02
1974.10
Established a comprehensive
Signed a contract for joint
disaster prevention system
investment
(all plants)
1976.03 1991.05
Completed IPO
the SPP plant
1991.05
1988.11
Selected as a new
Held an inaugural naphtha cracking
meeting and company in Yeocheon
established the Complex
company
1980.01 1988.11 Completed the SEG plant
1976.04 Held a joint ceremony
for the completion of 1991.06
Yeocheon
Petrochemical Complex
1980.05 1984.09 Signed a contract to

Signed a contract to Launched the labor Completed the adopt technologies with
adopt technologies union composite resin plant Lummus Crest, USA Completed the Daedeok R&D Institute
1979.03 1982.11 1986.06

Acquired Honam Won the USD 100
1970 Petrochemical Million Export Tower
1979.12
Established R&D
Institute
No. of employees
Started commercial 950persons
production (all plants)
Sales
Sales
100,417,820 280,433,891
No. of employees
Operating profit
60persons Operating profit
8,356,117 17,402,858
1976 (Unit: K‌ RW 1980 1990

in thousands)
1990-2000
Growing into a Chemical Company
The Growth
2001.01
Conducted the code
of ethics throughout
1997.01 the company
1993.03 1999.04 2001.02
Designated as a
Won the IR52 Jangyoungshil testing lab for KOLAS
Completed Completed
Award (adhesive resin ADPOLY) (Daedeok R&D
the 3PE plant the MMA plant
Institute)
1991.12 1997.04 1999.11 2001.10

1996 Completed the 3EG
Launched a mid- to long-term plant
vision “VITAL 21”
1997.10
1996.08 Completed the
Completed Purchased “Lotte Tower,” in-company standard Completed Completed
the NC plant the Head Office building management system the EOA plant the 3PP plant
1992.10 1995.03 1998.07 2002.03-12

Started commercial Implemented the
operation of NC and “Plant Clean-up”
BTX plants campaign
Completed the 7th Completed the PET plant

composite resin
production plant
1998.12
Completed an automated
1995.08
warehouse
Acquired the ISO14001 certification
(environmental management system)
1995.12
Established the environmental
management system (EMS) No. of employees
941persons
Sales
975,453,908
Operating profit
57,977,716
2000
Business Highlight Lotte Chemical’s Acquiring the Petrochemical Strengthening Global Research and
40-year History Business of Samsung Affiliates Business Competitiveness Development
2000-2010
Becoming a Global Player
The Leap
2008.02
2010.11
2004.04
Signed a contract to
establish Uz-Kor Gas Acquired TITAN Chemicals, Malaysia
Established the CPE Joint Venture Chemical
in China 2010.11
2008.03
2004.07
Won the USD 3 Billion Export Tower

Acquired Hao Won the Gold Tower Industrial Medal
Acquired KP Chemical Corp. Technology (CEO Cheong Bum-sik)
2003.03 2005.01 2009.01 2011.01

Completed Established Lotte Daesan Merged Lotte Daesan Petrochemical Established Honam
combined power Petrochemical Mitsui Chemical
generation facilities (Lotte Mitsui Chemical)
2009.10
2005.07
Produced 10 million ton of
2003.03 2011.02
Completed olefin Established HPM Alabama
the 3AS plant in USA
2006.05
2003.03 Established Hoseok Chemical & Acquired Sambark LFT 2011.11
Trade, a subsidiary in China Won the Silver Tower
Build the ERP system Industrial Medal
2009.12
2006.08 (CEO Huh Soo-young)
2003.06
Established Daesan MMA Corp.,
a joint venture, with Mitsubishi
Rayon
First exceeded 1 million

tons in ethylene
Acquired Hyundai production as a single
Petrochemical
plant in Korea
No. of employees
2003.09
1,594 persons
Sales
15,699,439,575
Won the Steel Tower

Industrial Medal Sales
(CEO Lee Young-Il) 10,634,785,606
Operating profit Operating profit
1,177,554,548 1,470,101,403
2010 2011
2015.02
Acquired water treatment business of
Samsung SDI
2015.04
Completed PE catalyst plant in Yeosu
2010-Current
2015.06
Signed a joint contract for ethane
cracker with Axiall, USA
Leading Korea’s Petrochemical Industry

2015.08
The Flight
Completed the Malaysia BR plants
2012.04
Signed a joint contract for Ube 2013.01
Industrial’s Titan BR Project Signed a contract for synthetic 2015.10
rubber production with Versalis
2012.05
2013.05
Completed the Uzbekistan gas project
Expanded production capacity of 1 Million 2015.10

tons of ethylene (Yeosu Plant) Completed Completed the PP Decided to acquire Samsung Fine
the PEᆞPP plant with owned technologies catalyst plant in Yeosu Chemicals
2012.06 2013.06 2014.01

2016~
First company to produce and Extended the Research Institute building Produced synthetic xylene with
supply Bio PET in Korea Hyundai Oil Bank Signed a
2013.11 contract to establish a joint
2012.12 venture with “Hyundai Chemical”
2014.04
Established LOTTE Chemical
Produced NCC for 3,000 consecutive days USA for shale gas business
Merged KP Chemical and changed the name at Yoesu plant
to Lotte Chemical 2014.06
2013.12
Expanded the production
capacity of PIA
Won the USD 6 Billion Export Tower
2013.12
Signed a contract for acquiring ESS
license with ZBB
No. of employees
Sales 2,791persons
Sales Sales
15,902,803,025 16,438,935,363
14,858,969,270
Sales
11,713,338,201
Operating profit
Operating profit Operating profit Operating profit
1,611,119,465
371,731,468 487,422,719 350,928,518
2012 2013 2014 2015 2016

Acquiring the Petrochemical Business of

Samsung Affiliates Enhancing Corporate Competitiveness
To cope with worsening profitability and ever-fiercer competition, largely driven by lower oil prices, a strong US dollar, decrease of en-
ergy demand in emerging economies and increase of energy expenses; businesses in the petrochemical industry are carrying out di-
verse ways of establishing their business. To ride a wave of change, domestic and international petrochemical companies, including
Lotte Chemical, are expanding business portfolios through strategic M&A deals and reinforcing products and related technologies.
Background of Petrochemical Vertical Integration

Lotte Chemical struck deals of acquisition for the chemical business with Samsung affiliates (Samsung SDI’s chemical division and
Samsung Fine Chemicals) and completed the process by the first half of 2016.
* Petrochemical business of Samsung affiliates: Samsung SDI’s chemical division, Samsung Fine Chemicals, and Samsung BP Chemical.
The division boasts the second biggest production capacity in terms of high value-added synthetic res-
Growth potential of in (used for home appliance and electronic products, inner and outer automobile parts) and enjoys the
former Samsung SDI’s sixth largest market share in the global market. The business is expected to continue its growth, thanks
chemical division to growing Chinese demand. In addition, the business sector that supplies highly strong and high im-
Current) Lotte Advanced pact-resistant materials is No. 1 in terms of the domestic market share of PC and artificial marble. It is
Materials operating eight overseas production and sales corporations in countries like China, Hungary and Mexi-
co, as well as a plant in Yeosu, Korea.
Growth potential of Outstanding technology of the company in the area of chlorine and cellulose line-up (largely used in
former Samsung Fine construction, industrial, textile and medical fields) has a competitive edge in both domestic and global
Chemicals markets, by adding production facilities, developing new markets and reducing costs. In addition, ace-
Current) LOTTE Fine tate of Samsung BP Chemical(current. Lotte BP Chemical), a joint venture between Samsung and BP
Chemical Chemicals, sustains its overwhelming market share in the Korean market.
Expected Benefits of Lotte Chemical

To reinforce sustainable growth, Lotte Chemical is striking strategic M&A deals. The acquisition of Samsung’s chemical business is ex-
pected to diversify the portfolio of precision chemicals and specialty products, to establish a vertical integration for Lotte Chemical’s
raw materials and to accelerate the entry into high value-added markets with high growth potential, including that of electronic ma-
terials, automotive components and the bio business, by adding the engineering plastic business, such as ABS and PC compounding.
20
Expanding business portfolio
Lotte Chemical’s M&A Performances 2015

Acquired Samsung Fine
Chemical and Samsung BP
Chemical as well as chemical
business of Samsung SDI
Exceeding KRW 5 trillion in sales 2010

Acquired Titan Chemical of
2003 Malaysia and Artenius UK
Acquired Hyundai
Petrochemical
2004
Acquired Competing on the global stage
KP Chemical
2009
Acquired Pakistan PTA
Strengthening Global Business

Competitiveness
Lotte Chemical continues to fortify its global capability by forming joint ventures and facility investment with do-
mestic and international firms. Led by the goal of going global, we will sustain its growth and development
through the diversification of production and sales posts and reinforcement of product portfolios, as a represent-
ative of the Korean petrochemical business.
Domestic
Isoprene
business project
The project is to construct a plant within the area of Yeosu Uzbekistan

Plant that separates, produces and sells isoprene, dicyclo-
pentadiene and piperylene from C5 included in pyrolysis
Korea
gasoline. This investment, which was decided by the board of
directors in October 2013 has been underway with a sched-
ule of commercial production in the second half of 2016.
C5, a by-product in the process of naphtha cracking furnace,
was used as a fuel through hydrogenation. This project will
separate effective isoprene, dicyclopentadiene and pip-
erylene from the chemical, thereby securing a stable material
supply source for the synthetic rubber business that we are
actively working on. In addition, by utilizing by-products di-
cyclopentadiene and piperylene as raw materials of petrole- Malaysia
um resin, the competitiveness of naphtha cracker can be
strengthened compared with that of ethane cracker.
Domestic Domestic
Joint venture Groundbreaking
for mixed xylene production of synthetic rubber plant
Lotte Chemical launched Hyundai Chemical Co., Ltd., a joint Lotte Chemical established a joint venture ‘Lotte Versalis
venture with Hyundai Oilbank in May 2014, in order to start Elastomers’ in October 2013 in cooperation with Versalis, It-
a project worth KRW 1.2 trillion. The purpose of the project aly’s state-run oil company, well known for its leading syn-
was to refine condensate crude oil and produce mixed xy- thetic rubber technology. Founded in 1989, Versalis is com-
lene. Hyundai Chemical, a 40-60 joint venture between pletely owned by the state-run Eni, Italy. It is a well-known
Lotte Chemical and Hyundai Oilbank, will be established petrochemical company for its worldclass technology in
within Daesan Plant of Hyundai Oilbank (land area covering synthetic rubber, operating olefin and synthetic plants in It-
260,000㎡) with the commercial operation set to begin by aly and across Europe.
early 2017. The completion of the project will allow Hyundai Lotte Versalis Elastomers will build a plant with the produc-
Chemical to annually produce 1.2 million tons of mixed xy- tion capacity of 200,000 tons of SSBR (next-generation syn-
lene to be supplied to Hyundai Cosmo, an affiliated compa- thetic rubber material) and EPDM (used for tire tube) in Yeo-
ny of Hyundai Oilbank. 1 million tons of light straight run su. The construction of the plant has been underway since
naphtha will be provided to Lotte Chemical. To date, Lotte October 2015 and is scheduled to make a commercial pro-
Chemical and Hyundai Oilbank have been largely depend- duction by the first half of 2018. Expected business effects
ent upon imported mixed xylene. However, we expect to se- are KRW 600 billion in sales, KRW 300 billion worth of im-
cure a stable source of mixed xylene through this project. port-substituting effect, KRW 300 billion worth of export in-
Furthermore, the self-procurement of xylene and light crease and about 150 thousand new jobs. Lotte Chemical is
straight run naphtha will save the two companies up to KRW also planning to build a new plant to produce 50,000 tons of
2 trillion per year, along with the expected annual revenue SIS and SBS by the second half of 2018 with the aim of tar-
of KRW 3 trillion coming from kerosene and diesel exporta- geting the hot melt adhesive market. Lotte Chemical will
tion. Lotte Chemical and Hyundai Oilbank will upgrade their provide the main raw materials, operating sites and struc-
respective competitive edge in the market thanks to this tures while Versalis will contribute proprietary technologies,
strategic partnership, ultimately providing a breakthrough technical engineering and expertise for the plant. The busi-
for the slowing domestic refinery and petrochemical indus- ness expansion will allow Lotte Chemical to upgrade its
try. competitive edge while diversifying business portfolio.
22
Uzbekistan
Completion
of Surgil project
The Uzbekistan Surgil project was initiated with the estab-

lishment of a joint venture Uz-Kor Gas Chemical LLC. The Ko-
rean consortium – Lotte Chemical, KOGAS, and GS E&R - and
the Uzbekistan state-run Uzbekneftegaz respectively own
50% of the stakes. The joint venture will manage the devel-
opment and operation of the Surgil gas field, construct and
run a gas chemical complex (GCC) that utilizes gas material
produced on the site, and produce and sell HDPE and PP
products. This project is significant in that Lotte Chemical be-
came the first Korean chemical company to secure natural
gas at low cost in Central Asia, developed a new business
model that includes upstream field (gas field), and licensed
its synthetic resin technologies to overseas markets.
The construction of the GCC that started in June 2012 was
completed in September 2015 as scheduled, and Lotte
Chemical participated in the supervision of the building
process as a PMC. The complex began to produce and sold
commercial products from January of 2016. Lotte Chemical
expects to sell 2.6 million tons of methane to the Uzbekistan United States
government annually. Upon the completion of Surgil pro-
ject, Lotte Chemical will be capable of producing 390,000 of America
tons of HDPE and 80,000 tons of PP per year. After that, the
company will advance to China, Central Asia and CIS, im-
proving sales revenue and profits. This project, along with
the ethane cracker
project in the US, will not only make the company less de-
pendent on naphtha but also raise its adoption of low-cost
gas material, which will enhance the company’s competitive
edge in the global market through diversification of raw ma-
terials, production plants, and sales area.
Malaysia USA
Titan NC Ethane cracker
expansion project plant construction
The name TE-3, an ethylene facility expansion project, was In December 2015, Lotte Chemical and US company Axiall
determined to stand for the third project of Titan (the first made joint venture agreements on the construction of an
and the second project were done before Lotte’s acquisition ethane cracker plant in Louisiana, USA. The deal is to pro-
of the Malaysian company in 2010). The project, initiated af- duce one million tons of ethylene annually, making use of af-
ter Basic Engineering Kick Off Meetingwith KBR in August fordable ethane made from North American shale gas. The
2014, is currently at phases of detailed engineering and ethylene product will be supplied both to Lotte Chemical and
construction with a schedule of completion by May 2017. Axiall. Lotte Chemical is carrying out another project that
When completed, the new plant will use K-COT (KBR Cata- makes 700 thousand tons of EG, using the material supplied
lytic Olefins Technology) converter, an FCC (Fluidized Cata- by the joint venture company, on the project site, at the same
lytic Cracking) converter, to crack naphtha, and this will be time. The joint investment will allow Lotte Chemical to be the
a departure from existing ethylene plants that make use of first Korean petrochemical company that uses locally-extract-
furnace (stream cracker). Lotte Chemical aims to be the first ed shale gas for the purpose of the ethane cracking business,
company in the global petrochemical business to introduce thanks to which, the company’s production capacity of ethyl-
FCC converter to naphtha cracker for commercial produc- ene will be increased from 2.82 million tons to 3.72 million,
tion,. The K-COT is expected to convert a wide range of and that of EG from 1.13 million tons to 1.83 million. Leverag-
feeds, from C4 to C10, to olefin at higher rates, up by 10 to ing the largescale production post, we will be focusing on de-
25%, compared with the conventional converting way (fur- veloping markets not only in North America but in Europe as
nace). This will bring a higher profitability in the operation well. Together with the Surgil project in Uzbekistan, this busi-
of the plant. This project will make olefin supply go smooth- ness cooperation will increase the quantity of affordable gas
er for Titan not just in Malaysia alone, but also in Indonesia. material and reduce the dependency on naphtha. Through
It will also be of help while studying the profitability and this, the company wants to diversify raw materials, produc-
feasibility of future domestic and overseas ethylene expan- tion base camps and sales regions, hoping to enhance global
sion projects. competitiveness.
23
Research and Development
Led by the highest level of R&D capabilities in the Korean petrochemical industry, Lotte Chemical is releasing a series of brand new
technologies and products. Lotte Chemical Research Institute will take the lead in identifying new growth engines continuously, to lay
the ground for sustainable growth and to contribute to the growth of the national economy.
Analysis of the R&D Investment Direction

As UNFCCC(United Nations Framework Convention on Climate Change) plans to adopt the Paris Agreement on December 12, 2015,
environmental regulatory measures for the chemical industry is expected to become stricter. Against this backdrop, we think it is criti-
cal to develop innovative technologies that can go with the climate convention, as well as energy reduction policies that we are al-
ready working on. To that end, we have to put determined efforts to the renewable energy business to diversify resources and realize
an environmentally-friendly chemical, all of which are designed to wean off the dependency on petroleum feedstock and cut down
CO2 emissions (You can find more information about eco-friendly technology development on this report 26~27page).
Lotte Chemical Research Institute

Lotte Chemical Research Institute carries out research for a future where Lotte Chemical goes hand in hand with customers. Capitaliz-
ing on R&D experiences built up over the last 40 years, the institute has made endeavors to secure source technology for sustainable
growth and has come up with new products. It is dedicated to taking the lead in realizing Vision 2020, a “Global Top 10 Chemical Com-
pany”, through sustainable growth. For this to happen, it continuously tries to secure research talents and expand R&D investment to
bolster its capabilities. In addition, it aims to become a global R&D hub that stands by Lotte Chemical’s global strategy, by expanding
product development and technology support to overseas subsidiaries, including LC Jiaxing EP (in China), LC Titan (in Malaysia) and
LC Alabama (in the US).
Vision of Lotte Chemical Research Institute
Global Top 10 Chemical Company

Vision-oriented Research Institute for Sustainable Growth
Enhancing competitiveness of existing businesses Creating new growth engines

(Independent technologies, new product development) (New business development and commercialization)
Strengthening R&D capabilities
Optimizing R&D portfolio Commercializing R&D results Building efficient R&D network
• ‌Choice and concentration • Commercialization-driven R&D • Securing talents

(focused management) • ‌Developing new products and • Expanding outsourced R&D
• ‌Reasonably distributing basic· businesses based on mid to • Utilizing
‌ internal and external
commercialization·product long-term strategies professionals
development tasks
• ‌Reinforcing verification system by
R&D stage
24
R&D Strategy in 2016
Strategy Details
Bolster
• ‌Develop petrochemical feedstock specialty products that are based on olefin and aroma and secure source
competitiveness of
technologies
basic chemical
• ‌Maximize synergy with the chemical business that formerly belonged to Samsung, utilizing self-developed and
Create synergy with
acquired technologies in an integrated way
acquired firms
• Expand high value-added products according to feedstock portfolio diversification
Secure new growth • ‌Facilitate the commercialization of membrane for water treatment, ESS and environmentally-friendly products
engine through more proactive R&D efforts
Major Activities for Greater Capability

Lotte Chemical has put in continued efforts to enhance technology development capabilities. We are actively working to lay the foun-
dation for higher competitiveness, including on technology cooperation with external partners, good workplace conditions and
agreements for nurturing R&D talents.
Research Intensive Time

The institute runs two-hour research-intensified time in the morning every day to help researchers produce good R&D results. Re-
searchers are recommended not to use emails and phones, so that they can focus only on research. For their part, managers are sug-
gested not to assign missions during this time span. In addition, the institute encourages them to effectively shorten research reports,
to have convergence meetings with colleagues from fields other than those they are assigned and to reduce the duration of a meet-
ing. These are steps taken for them to delve into their R&D activities.
Investments in R&D
R&D expense R&D workforce 346

52,710
(Unit: KRW in millions) (Unit: persons) 277
39,882
224
31,630
2013 2014 2015 2013 2014 2015
Major R&D Achievement in 2015

Lotte Chemical grew successful in developing technologies of TIPP, ESS and weight-reducing automotive parts. Now, we are working
on the commercialization of these technologies, thereby creating a driver for future growth. Development of eco-friendly and ad-
vanced products allowed the company to receive diverse prizes of external independent organizations. These awards became a show-
case for its outstanding technology.
TIPP(Transparent Impact-resistance PP)

Polypropylene(PP) is one of the most widely used materials in our daily lives, particularly for food containers. To serve its purpose,
this product needs to be transparent to check the contents of the internal and impact-resistant for the identification and safety of the
food stored inside. But, these two factors tend to go opposite. Lotte Chemical laid out an innovative material that increased levels of
both transparency and impact-resistance, compared with existing products. Mass production for this material is due in 2016.
25
Research and Development
Export of PE and PP Production Technology (Uzbekistan Project)

Lotte Chemical completed the construction of a mega-petrochemical plant in Uzbekistan and is going to start commercial production
in January 2016. This cooperative project between the Korean and the Uzbekistan government that utilizes abundant natural gas in
Central Asia is meaningful in that we exported its own PE and PP production technology (of catalyst, production process and applica-
tion to products), the first of its kind among Korean petrochemical businesses, and obtained a large-scale petrochemical plant that
produces feedstock in the region. This is an additional production post to the existing ones in Indonesia and Malaysia as well as Ko-
rea. The Central Asian plant will be a stepping stone, by helping Lotte Chemical market its products to European and Mediterranean
countries as it proceeds on its journey to a global petrochemical player, going beyond Asia.
Development of Large-scale Energy Storage System* ESS for new &

Stably supplying new & renewable energy
(ESS) renewable power
with fluctuating power generation
generation
Lotte Chemical has invested in ESS R&D and its commercializa-
ESS for
tion, which is spotlighted as a growth engine and future material power supply
Promptly meeting changes in demand by
in terms of energy. The company plans to make entry into the charging midnight electricity and
(commercial
supplying it at peak times
chemical flow battery ESS market, which features longer life and buildings)
higher safety compared with the existing lithium-ion battery. As
Supplying electricity stored in the UPS in
these characteristics are more suited for larger-scale ESS, the ESS for UPS
the event of a power outage
company aims to release its product in the ESS market based on
the Chemical Flow Battery in the second half of 2016. 1. ‌Supplying electricity and selling surplus
electricity by integrating solar power
ESS for apartment
* ‌ESS (Energy Storage System) : This system is the capture of energy produced at one system and ESS
time for use at a later time. It is using energy saved by self-developed solar power houses
2. ‌Supplying electricity at peak times after
or cheap night electricity. It can be used at peak time or demands high.
charging midnight electricity
* UPS : Uninterruptible power supply
ESS in Daesan company housing ESS in Lotte mart
Membrane Technology for Water Treatment

In December 2015, Lotte Chemical signed an MOU with Daegu
Metropolitan City to build a plant to produce membrane filters for
water treatment, which is scheduled to operate by the end of 2017.
Since 2011, the company has developed the membrane technology
as a next-generation growth engine and has invested in It. In
February 2015, we acquired Samsung SDI’s membrane technology.
Thanks to these efforts, we now have an outstanding edge in areas
of purification, sewage treatment, and recycling. In particular, Lotte
Chemical’s membrane boasts its strengths of being lightweight and
allowing purified water to flow with less resistance, realizing lower
working pressure. It also cuts down the use of air that is employed
to minimize pollutant accumulation, thus lowering the usage of
Showcase of water treatment technologies
energy. Through the agreement, Lotte Chemical will have a
membrane production facility that deploys a world-leading water treatment technology. And the new factory is expected to bring not
only diversification to the portfolio of future business but also more activities and jobs to the local economy.
* Membrane for water treatment: A thin piece that filters water pollutants, improving water quality and helping solve water-shortage problems
26
Development of Automotive Weight-reducing Materials

As gas mileage regulations become stricter and quality improvement puts more weight on cars, we are seeing increased demand for
materials of lesser weight. Responding to this circumstance, Lotte Chemical is developing materials that can reduce weight of vehi-
cles, increase fuel efficiency and meet tougher exhaustion gas regulations. For example, the company has developed and utilized di-
verse automotive materials, including reinforced plastic LFT and carbon fiber composites. The company’s outstanding technologies
in those materials were internationally recognized, such as the certification of NET and JET Europe’s Innovation Award.
Technology Features and Strengths Application

LTF ·‌Have its own original technologies, including those of high-speed production and plastic ·Car door module
(Long Fiber reinforcement. ·Back beam
Thermoplastics) ·‌Reduce weight and cost by 20 to 30% and 20%, respectively, compared with metals.
Carbon fiber ·‌Cut down weight of cars, by applying a new processing technology to hard-to-process carbon fiber ·‌Car panoramic
composite ·Promote Korea’s technology in the sector of advanced materials sunroof frame
Ultra-light carbon ·‌Exceptionally outperform existing carbon fiber composite in terms of reinforcement, thanks to its ·Body frame
fiber composite unique structure
·‌Can be a substitute for metal body frames, possibly the first of its kind in the world
Awards
Lotte Chemical’s ceaseless R&D efforts are recognized through international certifications and awards. Lotte Chemical will continue to
increase investments in research to become a world-leading chemical company.
Non-painting Injection Molding Technology:

NET Certification
In April 2015, Lotte Chemical developed non-painting injection
molding technology that uses gas counter pressure and received NET
certificate for the same. It is the first Korean company that applied in-
jection molded materials to automotive components, cutting down
25% of weight. It was also listed on MS specification. Currently, this
technology has been chosen for door trims of AE and IG, project car
names, and is expected to be adopted for more cars and parts.
A Concept Car “Intrado”: JEC Europe Innovation Award NET certification conferment ceremony NET certificate
In March 2015, Lotte Chemical received the JEC Europe 2015 In-
novation Award for its carbon fiber composite and environmental-
ly friendly materials employed in main parts of Intrado, one of
Hyundai Motor’s concept cars. The development of the material
was carried out through R&D collaboration between the two firms.
The conference is one of the world’s biggest events for composite
materials, and some 1,200 companies from about 90 countries
participate in it every year. The concept car features less torsion,
thanks to its solid and strong structural frame, provides more op- Innovation Award at the JEC Europe 2015 Certificate of JEC Award
tions for body frame materials, does not require expensive tools
for repair and cuts down the weight of the structural body by half.
CLFT : Door Module CFRP : Roof 1 ‌‌CFRP (Carbon Fiber Reinforced Plastic)
CFRP : Side Panel
: ‌An extremely strong and light fiber-reinforced plastic which
Bio Based PC contains carbon fibers
: Head Lamp Lenz 2 ‌CLFT (Carbon Long Fiber Reinforced Thermoplastic)
: A long fiber reinforced thermoplastic composite material
3 ‌Bio Based PC (Bio Based Polycarbonate)
: Engineering plastic made from bio mass
CFRP : Front Bumper Waterborne Primer 4 ‌Waterborne Primer
Back Beam CFRP : Main Frame : Eco-friendly Painting : Eco-friendly resin that substitutes existing CPP
27
Basis on Sustainability
Performance
Lotte Chemical has established the sustainability management

system based on its five core values of customer focus,
originality, partnership, sense of responsibility, and passion.
Partnership
30 Governance 36 Ethical Management
32 Sustainability Management System 38 Activating Stakeholders’ Engagement
34 Risk Management 40 Materiality Test
Passion
Originality
Customer-focus
Governance
Lotte Chemical pursues advanced management activities through transparent and fair corporate governance, through which we will
maximize our corporate value and protect the interest of stakeholders.
Board of Directors
The Board of Directors (BOD), the supreme decision-making body at Lotte Chemical, consists of three internal and four external direc-
tors. The appointment of Board members follows the procedure designated by relevant laws including the Commercial Act to ensure
objectivity and fairness. Internal directors are appointed by the recommendation of the BOD and external directors are nominated by
the External Director Candidate Recommendation Committee in consideration of their professionalism. The CEO, who knows our
management activities the most, serves as the chairman of the BOD.
(As of April 28, 2016)
Name (expertise) Gender Duty Appointment Position and Carrier

Shin Dong-bin Male Chairman and Representative Director Mar. 20, 2015 Current) Chairman, Lotte Group
Huh Soo-young Male CEO and Representative Director Mar. 20, 2015 Former) CEO, KP Chemical
Lee Ja-hyung Male Internal director Mar. 18, 2016 Current) Head of production HQ, Lotte Chemical
Park Kyung-hee Female External director, Mar. 20, 2015 Current) Professor
‌ in business administration,
(finance) Audit Committee member Ewha Women’s University
Former) President in business administration
Kim Yoon-ha Male External director, Mar. 18, 2016 Former) Director
‌ of General Bank Inspection Bureau,
(finance) Audit Committee member Financial Supervisory Service
Kim Chul-soo Male External director, Mar. 18, 2016 Former) Senior manager, Korea Customs Service
(tariff) Audit Committee member
Park Yong-seok Male External director Mar. 18, 2016 Current) Representative lawyer, Lee & Ko Law Firm
(legal)
Operation of the BOD

The BOD makes decisions on critical issues with regard to corpo- No. of BOD meetings held
rate management, items designated by relevant laws and articles
(Unit: times)
of association, major policies, and business conducts through 14
professional and reasonable processes. In 2015, the BOD held a 12
total of 14 meetings to review and deliberate on issues such as the 10
expansion of global business which are significant to the company.
Subcommittees under the BOD 2013 2014 2015
Lotte Chemical operates three subcommittees - External Director Attendance rate of external directors
Candidate Recommendation Committee, Internal Transaction Com- 100%
(Unit: %)
mittee, and Audit Committee - under the BOD. The External Director
96%
93%
Candidate Recommendation Committee’s roles are recommending
candidates with expertise for external directors. Internal Transaction
Committee’s roles are approving internal transactions with a certain
scale. And Audit Committee is conducting internal audit to secure
fairness in corporate management, respectively.
2013 2014 2015
Audit Committee
All Audit Committee members are appointed at the shareholders’
meeting and their tenure is set by the articles of incorporation, which ensures the independence of the committee. The committee
contributes to establishing sound corporate governance by focusing on preventive and preemptive audits from the decision-making
stage to post-audit on job execution in order to fundamentally avert conflicts of interest. The Audit Committee meeting is held at least
quarterly in accordance with its rule.
30
Basis on Sustainability Governance Sustainability Risk Ethical Activating Stakeholders’ Materiality
Management System Management Management Engagement Test
Subcommittee Member Name Purpose and Authorities

External Director Candidate Internal Director Huh Soo-young Recommendation of independent director candidates
Recommendation External Director Kim Chul-soo
Committee External Director Park Yong-Seok
Internal Transaction Internal Director Lee Ja-hyoung Deliberation and request for correction of internal transaction and
Committee External Director Park Kyung-hee private contracts over a certain scale
External Director Kim Chul-soo
External Director Kim Yoon-ha
Audit Committee External Director Park Kyung-hee Audit of accounting and works
External Director Kim Chul-soo
External Director Kim Yoon-ha
Performance Evaluation and Compensation

The BOD members are regularly assessed for their performances through fair and transparent procedure. A comprehensive evaluation
on their activities and contributions to the company is implemented in a reasonable manner. The remuneration limit is fully reviewed
in advance and confirmed at the shareholders’ meeting. The company determines the composition, responsibility, and operation of
the BOD every year and the results are transparently disclosed on the business report. Evaluation results and accompanying improve-
ment items are reflected to the BOD operation plan. These processes contribute to the development of the BOD.
Share Ownership
Lotte Chemical’s share ownership structure is stable. Shareholders are able to exercise their rights within the scope stipulated in rele-
vant laws and regulations.
Shareholder Structure
Other Minority Shareholders Lotte Corporation

Shareholder No. of shares Percentage
40% 31% owned (shares) (%)
Lotte Corporation 10,718,818 31.27
National Pension
Service Hotel Lotte 4,346,818 12.68
Lotte Holdings Co., Ltd (Japan) 3,186,000 9.30
7%
Treasury shares 583,388 1.70
Lotte Holdings Hotel Lotte Others 15,440,395 45.05
9% 13% Total 34,275,419 100.00
Credit Ratings and Date of Final Rating
Korea Investors Korea Ratings National Information &

Service (KIS)
2015. 09. 17 AA+ Corporation (KR)
2015. 10. 30 AA+ Credit Evaluation Inc. (NICE)
2015. 04. 28 AA+
31
Sustainability Management System
Lotte Chemical laid out a vision and a systemic strategy for sustainability management. To act on them, the company has bolstered
the implementation of detailed action plans, establishing the foundation for sustainable growth.
Sustainability Management System

Lotte Chemical set up “Global Top 10 Chemical Company” as its vision and put forth six major sustainability implementation strate-
gies. By supplementing the four existing major strategies, the company strengthened its willingness to pursue sustainability manage-
ment in a more systemic manner.
Global Top 10 Chemical Company
Sustainability
Management
Strategy
in 2016 Upgrading R&D Developing and Committing to safety Strengthening Developing global Realizing ethical
competency managing new and environmental response to market talents management and
businesses management changes social responsibility
Management Policies Core Values
Enhancing Core Capability, Field-oriented Management, Customer-focus, Originality, Passion,

Developing Talents, Green Management, Brand Management Partnership, and Performance
Implementation System
Education Programs Others
Launching in-house education courses for sharing and

spreading sustainability management
Making a compulsory pledge to ethical
management every year
Operating education programs for ethical management,
information security, customer information protection, and fair trade
Conducting basic education on information security and

job-specific in-depth education
Selecting KPIs for relevant organizations by each sector of sustainability
management and performance evaluation
Offering environmental education to raise employees’
awareness of low carbon green management
Sustainability Management Implementation Organization

Lotte Chemical has formed an efficient organization under the management and supervision of its CEO, and is currently carrying out
sustainability management strategy at our level. Sustainability Management Practice Council of the company selects organizations
responsible for diverse topics, including environmental safety, governance structure and community, and then efficiently implements
the management through clearer definition of assignments and the organic cooperation among related organizations.
CEO
Working-level Council for Sustainability Management
Strategic Environmental Safety General Support Corporate Office Support Procurement Legal Affairs
Management Team Management Team Team Communication Team Team at worksite Team Team
Management Environmental Corporate

Social contribution and shared growth Fair trade
strategy and system safety sector governance
32
Result of Sustainability Management Implementation

All employees worked together to execute the systemic sustainability management, resulting in meaningful achievements within and
outside of the company in 2015.
Included in DJSI Asia Pacific

Lotte Chemical has been included in the Dow Jones Index and DJSI (Dow Jones Sustainable Indices) Asia Pacific, nominated by SAM
(Sustainable Asset Management), for five consecutive years. Serving as a yardstick to evaluate SRI, the DJSI undertakes comprehen-
sive review of a company’s economic, environmental, and social aspects. As of 2015, only the top 20% of firms with sustainability
management system among the most valuable 600 companies in Asia Pacific markets (based on market capitalization) can be added
to the indices. In 2015, 40 Korean companies made their way into the DJSI.
Won the Excellent Corporate Governance Award

Lotte Chemical won the ‘Excellent Corporate Governance Award’
in 2014 and 2015. The prize, given by Korea Corporate Governance
Service, factors into different stakes, including those of laborers,
consumers, local community and environment, in the process of
selecting winners. Lotte Chemical received Grade A from the ESG
evaluation in which only one company acquired Grade A+. 30
companies won Grade A and 78 firms clinched Grade B+ among
669 Korean businesses in 2015.
* ‌ESG (environment, society and governance) evaluation criteria: It consists of five

standards: Whether measures of shareholders’ rights protection are in place; whether
sales report and other business issues are publicly released; composition of the board
of directors and its activity; guidelines of installing an auditing body and operation;
and, dividing business profit/loss Won the Top 100 Job Creation Company Award
One of the Top 100 Companies in Job Creation

Lotte Chemical earned good scores in categories of growth rate of
employment, employment quality and compliance with labor-re-
lated laws. Good performances in those areas allowed us to be
one of the top 100 companies in job creation. Going forward, we
will continue to generate jobs and elevate the quality of labor.
Won the Platinum Award at the Spotlight Awards

Our sustainability report won the Platinum Award at the Spotlight
Awards of the League of American Communications Professionals
(LACP). The competition comprehensively evaluates companies
around the world, including the global PR activities and accuracy
of corporates, transparency, and readability of released materials.
Thanks to the excellence in these efforts, Lotte Chemical became
the winner of the contest for the second year in a row. Won the Platinum Award at the Spotlight Awards
33
Risk Management
Lotte Chemical has been operating an integrated risk management system to quickly respond to potential business risks that might
occur within and outside of us, by identifying them in advance. It will form an efficient and stable business condition through actions
that effectively deal with not only economic risks but also social and environmental ones.
Risk Management System

Lotte Chemical’s business is under the influence of diverse risk factors, including global economic slowdown, worsened profitability
by excessive product supply, regulatory interference, poor performance of new business and foreign exchange rates. To minimize
these risks and continue sustainable growth, the company has been operating integrated risk management system Enterprise Risk
Management (ERM). This scheme is in service to identify and handle a bad element that undermines business sustainability and
quickly eliminate it before it materializes.
Stricter Risk Management

To manage risks under uncertain business surroundings, Lotte Chemical has built a system that responds to safety and environ-
ment-related laws, puts in place new businesses after thorough market surveys and investment profitability analysis, and ensures
that compliance risks do not take place.
Core Risk Management in Businesses

To effectively deal with various ever-growing internal and external risks, Lotte Chemical administers not only company-level risks but
also potential core risks in a systematic and preemptive way.
Industry Growth Risk︱Since 2011, slowing demand of petrochemical products, mostly triggered by global economic recession and
slow growth among emerging economies, has caused fiercer competition in the industry. But, restrictive supply increase that started
in 2011 and the fall in oil prices at the end of 2014 improved the profitability of naphtha cracker. These business situations can be af-
fected by economic recovery in the US and the EU, economy rebounds in China and other emerging countries, and oil price changes
and foreign exchange rates. We aim to reduce this risk, by developing high value-added products and new businesses.
Business Cycle Risk︱Generally, business cycles of the petrochemical industry that provides base materials to front industries, in-
cluding those like electricity, electronics, cars and machine, is 9 to 10 years. The industry is sensitive to the fluctuations of economic
activities and has a close correlation with GDP growth rate. Lotte Chemical is building real-time analysis on market situations and
considering it in business activities, as a way to minimize this risk.
Competition Risk︱In the past, competition factors in the petrochemical industry were mostly about the economies of scale and
price. But presently, they are more about high value-added product technology and quality. For its part, Lotte Chemical secured the
production foundation for products with high value through M&A deals and is making greater R&D investments.
Resource Procurement Risk︱The petrochemical industry uses ethane gas and naphtha as feedstock. While the US and oil producers
in the Middle East largely utilize ethane gas, virtually all of Korea uses naphtha. As naphtha is supplied through domestic refineries or
overseas vendors, its price, supply, oil price and foreign exchange rate can affect the competitiveness of Lotte Chemical. To mitigate raw
material risk, we diversified its supply chain, through the Uzbekistan gas field project and the Louisiana shale gas project in the US.
34
Arrangement of a Risk Portfolio

Besides core risks that might materialize in business, Lotte Chemical created a risk portfolio that is made up of 4 risk areas i.e. opera-
tion, finance, compliance and strategy. Each risk is chosen by company-wide coherent criteria and controlled in a preemptive and
consistent manner.
Operational Risk Financial Risk Compliance Risk Strategy Risk
• ‌Occurrence of environmental • ‌Loss from fluctuant • ‌Violation of environmental • Failure in new businesses
or safety incidents and exchange rate or safety regulations • ‌Deterioration of market
problems • ‌Insolvency of trade • ‌Violation of fair trade related conditions and growth
• ‌Damage to corporate image receivables regulations potential
due to inappropriate • ‌Decrease of profitability due
response to media to fierce competition
• ‌Poor management of • ‌Insufficient supply and
subsidiaries due to strong prices of raw
insufficient control materials
Tax Risk Management

Overseas worksites of Lotte Chemical are in strict observance of tax principles and regulations of the country they belong to. They are
paying due tax faithfully and releasing information publicly through audit report and on an electronic announcement system in a
transparent and dutiful manner. Going forward as well, they, as a corporate citizen, will continue to fulfill their obligation and manage
this risk rationally and fairly.
Internal Control System

Lotte Chemical efficiently controls risks that may occur in relation to relevant laws and regulations, through a strict internal control
system. The management and responsible organizations analyze work processes to classify risks wielding serious impact on business
activities, and assess and check if such risks can be controlled internally. The evaluation results are reported to the Audit Committee
as well as the BOD and subsequently reviewed and certified by the independent auditors and the Audit Committee. Through the in-
ternal control system, we aim to prevent non-compliance risks from taking place with relevant laws and regulations, increase the va-
lidity and efficiency of business management and improve the reliability of financial reporting.
Internal Accounting
CEO Ethical Management Team BOD
Controller
Executive in Charge of Internal Accounting

Audit Committee
Ethical Management Control System
Monitoring System
Plant Head Office
Research Institute
35
Ethical Management
Lotte Chemical wants to operate business management in ways that contribute to the social and economic development, and the wel-
fare of mankind, by creating values for stakeholders on the basis of ethical management. To this end, the company endeavors to make
all employees understand its ethical regulations and helps work ethics take deep root, while pursuing a clean and transparent corporate
culture that carries out social responsibility.
Ethical Management System

We have put in efforts to act on the ethical management principles that were declared publicly, by running the Ethical Management
Team under the CEO, and drawing up company-wide ethical management principles.
Ethical Management Team under the CEO

Lotte Chemical positions the Ethical Management Team under the CEO, and checks whether ethical management settles down, and if re-
lated programs are carried out as well as their performance levels. The team guides overall ethical management activities, such as devel-
oping and operating regulations and management systems, as well as verifies and supports the implementation of detailed activities.
Ethical Management System

Our ethical management system covers all business ethics-related issues, including code of ethics, written oath, training, implementa-
tion, promotion, consultation and reporting of the management. By way of the system, all employees can share and monitor related ac-
tivities. We are making endeavors so that those who work at the company and external stakeholders efficiently manage and improve
those issues.
Code of Conducts
Lotte Group set up the ‘Code of Conduct’ based on the five core corporate values. The group-level code is embodied in more concrete
ways than affiliate-level ethical codes. All employees have attended collective trainings about the higher level code and signed a pledge
of sincere practice. In 2016, Lotte Chemical will form a task force team under the Ethical Management Team to write a ‘Code of Practice’,
which will later be announced for all those working at the company to observe.
Mission of
“Contributing to the Quality of Human Lives through Trustworthy Products and Services”
the Group
Vision of
the Group
“Asia Top 10 Global Group”
“Management Ways” “Thinking and Behavior”
Management Principles Core Values Code
• ‌Enhancing Core Capability • Customer focus • Trust from employees

• ‌Field-oriented Management • Originality • Trust from customers
• Developing Talents • Partnership • Trust from partners
• Brand Management • Sense of responsibility • Trust from society
• Passion
36
Ethical Management Program

We have put in place different ethical management programs, based on the ethical management system. We inspect whether they are
carried out by all employees and ensure that we inculcate them as part of our routine.
Customized Ethical Management Trainings

Lotte Chemical provides ethical management training customized for different positions and topics. The education system is designed
for proactive type of ethical management that factors in the expertise and accountability on the job and the relational ethics that re-
lates to the cooperation and respect among those who work at us going beyond the passive type of ethical management that largely
focuses on the prevention of unethical practices or irregularities. Trainings have been repeatedly carried out in diverse ways, includ-
ing online and collective forms. In 2015, Lotte Chemical expanded ethical management training to three subsidiaries, KP Chemtech,
Sambark LFT and DACC Aerospace at their workplaces.
Performances in Ethical Management Implementation since 2013
2013 2014 2015 2016
Feb. Jan. Jan. Jan.

• ‌Sending the CEO’s letter on • ‌Sending the CEO’s letter on business • ‌Sending the CEO’s letter on business • ‌Sending the CEO’s letter on
business ethics to stakeholders ethics to stakeholders and suppliers on ethics to stakeholders and suppliers on business ethics to stakeholders
and suppliers on Luna New Luna New Year’s Day Luna New Year’s Day and suppliers on Luna New
Year’s Day May Aug. Year’s Day
Sep. • ‌Offering ethical education to • ‌Offering ethical education to new recruits
• ‌Sending the CEO’s letter on manager-level expatriates • ‌Offering ethical education to employees
business ethics to stakeholders Aug. in charge of procurement
and suppliers on Korean • ‌Sending the CEO’s letter on business • ‌Sending the CEO’s letter on business
Thanksgiving Day ethics to stakeholders and suppliers on ethics to stakeholders and suppliers on
Korean Thanksgiving Day Korean Thanksgiving Day
Nov. Oct.
• ‌Conducting education on business • ‌‌Conducting education to develop
ethics for general employees managers at overseas subsidiaries
Implementation of Education on Ethical Management in 2015 (11 collective and one online educations)
Classification Course Date Target Contents

Collective Entry-level education for new recruits 2015. 08. 05 New recruits in the second half Introduction of ethical management and the
education role as a new employee
Ethical education for subsidiaries 2015. 09. 08~09 (Twice) KP Kemtech employees Creation of ethical organizations and
2015. 09. 10~11 (Twice) Sambark LFT employees employees’ attitude
2015. 09. 14~15 (Twice) DACC Aero Space employees
Education on business ethics for 2015. 08. 27 All staff in procurement sector Establishment of trust relationship with
procurement staff partners on the basis of ethical management
Education course to develop 2015. 03. 23 Employees who dispatched to Enhancement of mindset toward ethical
expatriates 2015. 05. 28 LCUK, LCPL, LC Jiaxing EP, management and education on anti-bribery
2015. 10. 26 LC Alabama, and LC Titan laws and anti-corruption laws by each country
Online E-learning for Lotte Chemical’s Weekly All employees Video program for establishing a culture of
education business ethics (52 times a year) ethical management
Online Shinmungo
Since 2011, we have been running “Online Shinmungo” (https:// Classification Unit 2013 2014 2015
ethics.lottechem.com), a compliance-reporting system, on the Bidding and contract cases - 2 1
webpage. We make reporting any unethical or illegal behaviors ob- Sales and receivables cases 1 2 2
Grievances of suppliers cases 1 1 7
ligatorily and detailed contents and personal information are kept
Complaints on work process cases 3 - 3
in confidence to protect informants from any disadvantage and Others cases 1 - -
unfair treatment. We also operate other reporting channels such Total cases 6 5 13
as post, wired telephone and emails to spread fair-ness and trans- Follow-ups and prevention of cases 6 5 13
recurrence
parency in businesses.
37
Activating of Stakeholders’ Engagement
Lotte Chemical lays emphasis on cooperation and communication with all stakeholders and looks for ways of prosperity for all. Thus,
we are always proactive in communicating with stakeholders through diverse channels, listening to their opinions via regular inter-
views, and distributing economic value generated from business activities.
Distribution of Economic Value to Stakeholders

Tax
re
W
tu
ag
di
Government
ea
en
nd
p
307.8
ex
we
ital
lfa
Shareholders· Employees
Cap
re
Creditors
Based on 251.8
90.5 Non-consolidated
Financial
Surplus
Sales Statements
Economic value
Local (Unit: KRW in billions) Business
8,471.9 communities Partners 2,683.2
Investm
10.6 5,073.9
Non-strategic
ent
investments
s in
54.1
loc
al
co
un
m
iti re
m
es tu
ndi
e
s exp
Sale
Activating of Stakeholders’ Engagement

We understand stakeholders’ diverse opinions about our sustainability management through diversified channels. We will adopt their opin-
ions to our management policies and establish our business directions toward prosperity with stakeholders from a long-range perspective.
Stakeholder Communication Channels
Government We contribute to creating social values and jobs, and • ‌Public hearing by the government • ‌Participation in
improving the quality of people’s lives by observing laws, • Forum national tasks
and conducting sound business activities. • Council • Collaboration programs
Employees Fair compensation and diverse welfare systems are offered • ‌Labor-Management Council • Satisfaction survey
to create optimized work environment. We also strive to • ‌Events for communication • Intranet
build a culture where employees are able to participate in • ‌Site Operation Committee • Presentation
‌ on
corporate management voluntarily. business status
Business We provide business partners with fair opportunities and • ‌Meetings with business partners • Lotte Academy
Partners ensure transparent transaction with the aim of mutual • ‌Technical cooperation project • ‌CEO’s visit to business
prosperity. with SMEs partners
Local Diverse channels are being operated to swiftly communicate • Sisterhood tie • Environmental cleanup
Communities with local communities. We are also proactive in social • Meetings
‌ with local residents • ‌Social contribution
contribution activities. activity
Shareholders To promote both corporate value and shareholder value, we • Shareholders’ meeting • IR website
and Investors carry out transparent and efficient management activities • Disclosure • ‌Ethical management
as well as create profits. website
Customers • Direct visit (frequently) • ‌Customer invitation
We always listen to requirements of customers through a
• ‌Customer satisfaction survey program
variety of channels and implement regular surveys to
• ‌Customer complaint
maximize customer satisfaction.
treatment process
38
Interview with Stakeholders
Transportation cost reduction is the best case that I have experienced in the business with Lotte
Chemical. As the plant of my company is located in Yeosu, I could save costs, by changing the sup-
Customer ply channel from Lotte Chemical Daesan Plant to Lotte Chemical Yeosu Plant. I believe that a win-
win business between Lotte Chemical and a partner can be possible when they draw a big picture
rather than stick to short-term interest or profit. Therefore, all domestic businesses, regardless of
their position of being a seller or buyer, have to consider ways that show their priority needs
Kim Mun-hee, Manager of Kumho Petrochemical
Korea Technology deals with the manufacturing, installation and maintenance of machine and
piping, and provides water-jet cleaning services for machinery and diverse equipment. As a Lotte
Chemical’s partner, we participated in Lotte Chemical’s Industrial Innovation Movement. Owing to
Business
Partner Lotte Chemical’s workplace safety guidelines and accident-preventing programs, we have not ex-
perienced even any minor accidents so far. In addition, we are devising solutions for problems
that may occur at any point of the whole process, through communication and cooperation with
the company. My experience tells me that we have to work together to develop technology and a
safe workplace, through long-term management and rewards.
Han Hyeon-seok CEO of Korea Total Technology
The relation with Lotte Chemical goes back to 2010 when it began commodity donations. The
company not only gave us Lotte World voucher and beverages, but also provided financial support
Local for psychiatric consultations and treatment programs for children. With these aids, my center can
Community care for young babies and children. But, lack of staff failing to meet legal guidelines and uncondi-
tional sacrifices make the working conditions of the center very poor. I hope that Lotte Chemical
becomes a talent donor and sponsor who can solve the issue of staff shortage. I would like to thank
Lotte Chemical for its will to continue volunteer service and sponsoring. I think it is meaningful to
offer assistance to beneficiaries, however small it may be as it provides them with an opportunity
for a better life. Kim So-hyeon Director of Cheongwoon Welfare Center
The Korean Petrochemical Industry Association is a non-profit organization that represents 33 mem-
bers which pursue a solid and long-term development of the Korean petrochemical industry. We are
Relevant worried about surplus of global supply as supply has outpaced demand recently. Particularly, the Chi-
Institution nese market is shrinking and hence global competition among players that operate on low-cost foun-
dation in the Middle East and the US is expected to grow fiercer. I think Lotte Chemical is a very impor-
tant company as it invests in facilities and human resources for sustainable development in the
Korean market. I believe that Lotte Chemical will nurture more R&D efforts to develop high value-add-
ed products and new production processes to secure a mid and long-term growth drive.
Kim Min-wook Assistant Manager of the Korean Petrochemical Industry Association
Lotte Chemical has been working to grow further, through ventures, which include the recent acquisi-
tion of Samsung group’s chemical business and continued global market development. I feel the com-
pany has to focus on creating synergy between the existing and the newly acquired businesses, and
Investor bolstering market dominance to respond to risks in new businesses and new market development.
Also, establishing a sound and transparent governance structure, by acquiring friendly shareholders
and transparent dividends of profit, is a critical element in pursuing a stable management. Lotte
Chemical will have to continue to strengthen the communications with stakeholders by sharing its vi-
sion, through measures, which include publication of sustainability reports.
Kim Jun-sik Assistant Manager of KEB Hanabank
39
Materiality Test
Lotte Chemical understands key issues with regard to sustainability management through materiality tests, and transparently shares
its response strategies and performances with stakeholders.
Materiality Test Process
STEP 1 STEP 2 STEP 3

Arranging issues in the aspect
Creating an issue pool Carrying out materiality test
of materiality
Global initiatives in sustainability Stakeholders’ interest Linkage of key issues in the aspect of
management • ‌Online survey of stakeholders materiality
• GRI G4 (2nd week of Mar. 2016) and interviews • ‌Creating the table of contents in
• DJSI etc. with external experts connection with specific aspects
defined on the GRI G4 guideline
Analysis of internal and external Impact on business
environment • Financial impact Planning detailed contents
• Benchmarking of advanced companies • Media research • ‌Creating contents to be reported in
• Media research • ‌Reporting issues of advanced connection with specific aspects
• Issues of the previous report, etc. companies, etc.
Creating an issue pool consisting of

Creating the table of contents linked
32 issues in the areas of general
Identifying 12 key issues from with 6 specific aspects (environment,
management, environment, labor,
the issue pool safety & health, employees, customers,
safety & health, fair business operation,
and local communities)
community engagement, and customers
Composition of Core Reporting Aspects

The 12 key issues drawn up through the materiality test was adopted to this report in accordance with 6 core reporting aspects of environ-
ment, safety, labor & human right, supply chain management, customer value, and social contribution. Core reporting aspects were prior-
itized in consideration of the level of impacts on Lotte Chemical’s future businesses and stakeholders’ needs in a comprehensive manner.
Survey of Internal and External Stakeholders

We surveyed employees, customers, business partners, local communities, investors, government, and relevant institutions, on the
top 8 issues among 15 economic, social, and environment issues which are emphasized.
Internal Stakeholders External Stakeholders
Management innovation
activities 6.4% Social contribution 6.7%
Safety management at Safety management at
worksite 7.0% worksite 7.4%
Employee competency Management innovation

development 7.0% Others 30.7% activities 7.8% Others 31.8%
R&D capability
R&D capability
enhancement 7.9% Operating enhancement 8.5% Operating
performance performance
Ethical management 13.1% Ethical management 10.6%
8.4% 8.8%
Respect for human rights
of employees and local
communities Labor-management Customer management Support for suppliers
9.3% relationship 10.1% 8.9% 9.4%
40
Results of Materiality Test
Entry into the global market and expansion of

Impacts on business
worksites
2
3 R&D capability enhancement
9 Monitoring of GHG emissions

22 Development of eco-friendly products and
services
12
Advancing strategies, policies, and systems for

environmental management
12 24 14
23
18 Education to enhance employee competency
18
22 Optimum compensation to employees
Dissemination of safety and health culture

companywide
23
30
9
31 Safety enhancement and accident prevention
at worksite
24
14
2 Enhancement of mutual growth policy and
activities
25
25
Investments in social welfare facilities and
co-prosperity with local communities
30
3 31 Continuous customer satisfaction activities
Interest of external stakeholders
Reporting Contents in Connection with Specific Aspect

Classification Key Issue Specific Aspect Classification Page
2 Entry
‌ into the global market and
expansion of worksites
Business Highlight 22~27p
Economy
3 R&D capability enhancement
9 Monitoring of GHG emissions
12 ‌Development of eco-friendly
01. Environment 44~51p
products and services
Environment
14 ‌Advancing strategies, policies, and
systems for environmental management
18 ‌Education to enhance employee

02. Safety 52~55p
competency
22 Optimum compensation to employees 03. Labor & Human Right 56~65p
23 ‌Dissemination of safety and health culture Focus on

companywide Sustainability
24 ‌Safety enhancement and accident

Society prevention at worksite
25 ‌Enhancement of mutual growth policy and

04. Supply Chain Management 66~69p
activities
30 ‌Investments in social welfare facilities and

05. Customer Value 70~73p
co-prosperity with local communities
31 Continuous customer satisfaction activities 06. Social Contribution 74~81p
41
Material Issues
We report 6 key issues with regard to our sustainability
management, which have attracted the most attention of
stakeholders on the basis of the results of materiality test.
EPP (Helmet)
PET (Water bottle)
EVA (Shoes)
42
Overview Letter from the CEO About Lotte Chemical Introduction of Business
44 Issue 1 Environment 66 Issue 4 Supply Chain Management
52 Issue 2 Safety 70 Issue 5 Customer Value
56 Issue 3 Labor & Human Rights 74 Issue 6 Social Contribution
Net profit Energy saving
KRW 990.7 billion 983 TJ
Environmental Reduction of CO2

investments and
management emissions
KRW 103.5 billion 55,063 tCO e 2
No. of employees
Rate of by-product who completed
recycling environmental
specialist course
100 %
289 persons
Education hours Education on

per capita human rights
128.8 hours 15 times
Investments in local
Shared growth fund
communities
KRW 135 billion KRW 10.6 billion
Customer Participation rate of

satisfaction level employees in
voluntary donation
80.6 points 92 %
SM (Notebook Cases)
43
Issues 01
Environment
As the world pays more attention to environment, many leading global
companies are putting in utmost efforts to become environmental
friendly. They are improving their production process so that it reduces
harmful substances and goes green. They also take more proactive
steps, including development of eco-friendly technology and products,
instead of settling for mere prevention of environmental pollution.
Through these activities, Lotte Chemical aims to be a company that
helps the environment revive itself. In this report, Lotte Chemical intro-
duces the strategy and objective of environmental management, and
efforts for minimizing environmental impact and developing green
technology and products.
Our Response
Performances in 2015
Classification Key Issue 2015 Goal Performance Achievement
Response to Setup and implementation of Deployment of energy staff by plant for 1. Deployed responsible staff
●
climate change strategies to purchase systematic response to climate change 2. ‌Hosted an idea contest on GHG reduction
emissions trading Implementation of the 2nd stage of 1. ‌Secured emissions trading rights and built
emissions trading roadmap a system for efficient management ●
2. ‌Strengthened communication
Analysis of emissions trading Participation in NGMS(National GHG 1. ‌Registered company-wide
trends and reporting Management System) and CDP GHG statement information ●
2. Participated in CDP
Minimization of Enhancement and savings of Activation of raw materials and
◐
environmental raw materials and energy water recycling
impact management Establishment of raw materials
◐
management system
Energy management and savings Recovered D-EG2 steam and operated MVR ●
Minimization of Minimization of pollutant Minimization of air pollutant emissions 1. Installed automatic air pollution detectors
environmental emissions 2. Installed regenerative thermal oxidizer ●
impact 3. Introduced enclosed systems
Eco-friendly Development of eco-friendly 1. ‌30% increase in manufacturing
products and products eco-friendly products
◐
technologies 2. ‌Development of eco-friendly
cutting-edge materials
Plans for 2016

Classification Key Issue 2016 Goal Achievement Index Deadline
Response to climate Setup and implementation of Implementation of the 2nd stage of emissions Securing emissions trading rights -
change strategies to purchase emissions trading roadmap
trading
Analysis of emissions trading trendsTop 10% in the evaluation of corporate Evaluation level -
and reporting governance, risks and opportunities, and
strategies with regard to CDP
Minimization of Enhancement of resource and energy 100% participation in the car-free day Employees’ participation in the -
environmental impact management and savings campaign car-free day campaign
Eco-friendly products Development of eco-friendly products Technology development for biodegradable Commercialization level of -
and technologies biopolymer and eco-friendly water treatment eco-friendly products
44
Environmental Management
Global Leading Top-tier Chemical Company
Environmental Strategy Balance between Economy and Environmental Preservation
• Preemptive response to new environmental regulations

• Expansion of chemical substance management system
• Enhancement of environmental pollution prevention activities
The Safest Eco-friendly Company
• Improvement of environmental pollution monitoring system
Preemptive response Compliance with
Risk management
to regulations obligations
Based on a green management strategy, Lotte Chemical is prac-

Safety and Communication
ticing systemic and strategic environmental management. Each Response to
environmental with external
climate change
worksite of the company continues efforts to reduce green- management stakeholders
house gas (GHG) emissions, minimize environmental impacts
Environmental and safety management sticking to
and cut down the use of energy and other resources. It will ac- basics and underlying principles
tively respond to environmental regulations and meet its cor-
porate environmental responsibility, by way of securing
eco-friendliness in its products and technology as well as de- Organization Responsible for Environmental Safety
veloping green products and technology. Management
Lotte Chemical created an organization that controls and moni-
Mid and Long-term Strategy and Goal of tors all activities related to environmental safety at its headquar-
Environmental Management ters. The body implements preemptive measures designed
By setting up a “Top-tier Asian chemical company that aims for through trend analysis and new environmental regulations be-
harmony between nature and humanity” as its mid and long- fore related rules go into effect. In addition, responsible organiza-
term vision, Lotte Chemical wants to become the most safe and tions in each worksite conduct self-led monitoring and manage-
environmentally-friendly company. Keeping this vision in mind, ment activities in an aim to control environmental safety risks.
the company is putting in efforts to “reduce 30% GHG by 2018 These efforts allowed the company to function without penalties
compared to emission unit in 2009” and “realize 30% of total and restrictions, with regard to non-compliance with environ-
sales from the green business by 2018”. mental laws and regulations, for three years starting in 2013.
45
Environmental Management Activities Green Management System Certifications
Voluntary Agreement Development of Classification Certification Remark

Environmental Yeosu ISO 14001 Environmental management system
on Purchase of Environmental
Impact Assessment Plant
Eco-Products * Specialists OHSAS 18001 Occupational safety and health
management system
KOSHA 18001 Occupational safety and health
Laying the
management system
foundation for
Continuously ISO 9001 Quality management system
green growth by Minimizing
investing in ISO·TS 16949 Automotive quality management system
activating voluntary environmental risks
environmental KS 7001·KS 7002 Green management system
green management by analyzing
educations to
activities, and impacts from noise, Daesan ISO 14001 Environmental management system
nurture
establishing and soil pollution, and Plant OHSAS 18001 Occupational safety and health
environmental
implementing waste management system
specialists
green purchasing KOSHA 18001 Occupational safety and health
plans management system
ISO 9001 Quality management system
*‌A council aimed at motivating the production, distribution, and consumption of
KS 7001·KS 7002 Green management system
eco-products and pursuing co-prosperity of participants in the initiative
Ulsan ISO 14001 Environmental management system
Response to Climate Change on the

Plant OHSAS 18001 Occupational safety and health
management system
Basis of Environmental Management ISO 9001 Quality management system
R&D ISO 14001 Environmental management system
Institute ISO 9001 Quality management system
Strategy for Response to Climate Change
ISO·TS 16949 Automotive quality management system
KS 7001·KS 7002 Green management system
Analysis and control
Setting up and
of execution results
implementing Analysis of emissions
of the strategy for
strategies to
response to climate
trading trends and Strategy and Activity in Response to Climate Change
purchase emissions reporting
trading
change by each Lotte Chemical is working on company-wide activities, in re-
worksite
sponse to climate change.
Organization for Responding to Emissions Trading

We manage and analyze greenhouse gas emissions result by
The Safety and Environment Technology Division takes the lead
each worksite. In addition, headquarter dep. sets a preemptive
in responding to climate change at Lotte Chemical. Strategies.
plan and controlls all worksites by each worksite.
Remedial measures for climate change, performance manage-
ment, and emissions trading are under preparation at the com-
Green Management System
pany level. Also, those who work at each plant suggest diverse
Lotte Chemical has been operating green management system GHG reduction ideas and practices, while communicating with
at a company level, through which we minimize GHG emissions counterparts at the headquarters. In addition, the company is
and environmental pollution, efficiently consume resources preparing for emissions trading, and factoring related issues
and energy, and regularly monitoring mid- to long-term im- into management activities, by drawing up and managing the
provement activities. We also established the GHG Gas & Ener- Roadmap for Emissions Trading System.
gy Management System (GEMS) to enhance green growth.
Roadmap for Emissions Trading System
Certifications on the Green Management System Lotte Chemical has established a roadmap in preparation for the
We examine our green management system via external inspec- introduction of emissions trading system. The company, now in
tion every year and reflect improvements to the system for the second phase of the plan, from 2015 to 2017, is focusing on
more strategic and systematic green management. strengthening both internal and external communications, while
securing GHG emissions rights and setting up comprehensive
Reassignment of Green Company Certification (Daesan Plant) management of the rights through a system. Beginning from
2018, the company will control the amount of GHG emissions
and strive to reduce it, by putting emphasis on obtaining emis-
sion rights through low carbon production process and technol-
ogy development for higher productivity, as well as fortifying do-
mestic and international networks related to emissions trading.
GEMS (GHG & Energy Management System)

In 2010, Lotte Chemical set up the SAP-based GEMS for the first
time in the Korean petrochemical industry to analyze risks re-
• Daesan Plant was designated as a green plant again in 2015, since its first lated to climate change. Run as an online monitoring system, it
nomination in 2011. comprehensively controls the management of GHG reduction
• Period: From May 13, 2015 to May 12, 2018
• First assignment: February 8, 2011
by objective and results, the integration of energy and invento-
ry and performance management.
46
Material Issues Environment Safety Labor & Supply Chain Customer Social
Human Rights Management Value Contribution
Participation in Carbon Disclosure Project (CDP) GHG Emissions

(Unit: tCO2e)
Establishing response to climate change as a major manage-
Classification 2013 2014 2015
ment issue, Lotte Chemical is actively partaking in carbon dis-
Direct Yeosu Plant 1,981,623 1,994,966 1,958,676
closure project (CDP). Major global enterprises are taking part emissions Daesan Plant 1,777,219 1,784,568 1,673,355
in the CDP, as it is a scheme designed to minimize business Ulsan Plant 657,292 616,113 565,995
risks related to climate change. We have been releasing carbon Head Office and 984 1,246 1,311
other worksites
information and results of climate change response, and differ- Indirect Yeosu Plant 448,667 452,141 474,786
ent areas with regard to the issue have been an object of evalu- emissions Daesan Plant 628,374 638,602 642,546
ation, including corporate governance, risks and opportunities, Ulsan Plant 390,452 351,268 310,630
strategies, GHG emissions accounting and communication ac- Head Office and 3,946 4,303 4,496
other worksites
tivities. Total Yeosu Plant 2,430,290 2,447,107 2,433,462
Daesan Plant 2,405,593 2,423,170 2,315,901
Activities to Reduce GHG Emissions and Ulsan Plant 1,047,744 967,381 876,625
Head Office and 4,930 5,549 5,807
Save Energy Consumption
other worksites
As a response to the GHG emissions trading scheme, Lotte
Chemical submitted specifications of company-level GHG and * ‌Head Office and other worksites: Head Office (Seoul), Research Institute (Daejeon),
Kukje Building (Busan)
registered relevant information with NGMS in March 2015. Fur- * ‌Figures in 2014 may differ from the previous report as those were drawn from the
thermore, we collected ideas on curtailing GHG emissions and final GHG statement.
energy consumption by plant, before applying them to fields.

In 2015, it reduced 55,063 tCO2eq of CO2 and 983 TJ of energy.
Reduction of GHG Emissions and Energy Use by Each Plant
Daesan Plant
2015
Ulsan Plant
Yeosu Plant
Yeosu Plant Daesan Plant Ulsan Plant
No. of reduction activities No. of reduction activities No. of reduction activities

29 cases 21cases 6 cases
CO2 reduction CO2 reduction CO2 reduction
28,636 tCO e 2 14,848 tCO e 2 11,579 tCO e 2
Energy saving Energy saving Energy saving

499 TJ 265 TJ 219 TJ
Classification Unit 2013 2014 Classification Unit 2013 2014 Classification Unit 2013 2014
No. of reduction cases 61 27 No. of reduction cases 21 18 No. of reduction cases 4 13
activities activities activities
CO2 reduction tCO2e 33,781 11,122 CO2 reduction tCO2e 19,620 12,895 CO2 reduction tCO2e 4,167 9,144
Energy saving TJ 637 172 Energy saving TJ 324 375 Energy saving TJ 81 186
Best Practices Best Practices Best Practices
• ‌H-PC: Producing MS by using waste • ‌D-EG2: Reducing butene column steam • ‌K-PIA2: Saving fuel costs by optimizing
heat of MPC Reaction Tower OVHD (MVR consumption by installing waste heat the pre-heater in PIA process
installation) recovery and MVR • ‌K-PIA2: Saving LNG costs by installing more
• ‌H-MMA: Reducing butene column steam • ‌D-NC: Reducing deaerator (501-U) steam anaerobic digesters
consumption by integrated operation of TBA consumption by recovering quench water • ‌K-PTA3: Installing RPF (Rotary Pressure
• ‌H-COG: Increasing recovered condensate steam Filter)
heat by controlling LP Condensate Cooler • ‌D-SM: Reducing steam consumption by
CW adopting refining vacuum pump
• ‌H-BTX: Reducing steam consumption by
installing heat exchangers to recover waste
heat of the 1st reactor
47
Minimization of Environmental Impact Energy Saving Case in Daesan Plant︱Daesan Plant has cut
down energy usage, by utilizing waste heat and pressurizing
To minimize environmental impact from product manufacture low-pressure steam in the production process. For this, the
and its process, Lotte Chemical conducts self-inspection by plant installed absorption refrigerating machine, heat exchang-
worksite and built Tele-Monitoring System (TMS) for automatic er for waste heat recovery, and MVR in October 2015, and their
measurement. test run was completed in November 2015. The installation is
expected to bring down D-EG2 import steam by 29.7 ton per
Efficient Resource Management hour and KRW 11.3 billion of costs annually.
Raw Material
Lotte chemical is supplied with feedstock by domestic refiner- Company-wide Efforts to Save Energy︱Lotte Chemical is
ies and overseas vendors. Including naphtha and mixed xylene. minimizing unnecessary use of energy in offices, by replacing
For effectiveness, we will establish a system for efficient raw lightings and switch panels with ones with higher energy effi-
material management and its’ recycling, by performing diverse ciency. It has been waging the Car-Free Day campaign and en-
innovative activities. courages employees to leave vehicles at home on a designated
day in compliance with the government-led energy-saving initi-
Use of Raw Materials ative.
(Unit: tons)
Yeosu Daesan Ulsan
Total Energy Use
(Unit: TJ)
3,113,841 Yeosu Daesan Ulsan
2013 3,196,245
1,227,141 46,663
3,031,950 2013 49,218
2014 3,174,834 18,682
1,041,076 46,506
3,138,235 2014 50,078
2015 3,074,429 16,238
708,482 46,267
2015 47,573
Water and Wastewater

13,134
Each plant is provided with water in the most efficient way. Wa-
ter supply to Yeosu Plant is from Juam dam, while Daesan Plant Energy Use
uses water from Daeho reservoir and Boryeong dam. Daeam (Unit: TJ)
dam and the Nakdong River are the water sources for Ulsan Classification 2013 2014 2015
Direct Yeosu Plant 37,571 37,412 36,731
Plant. Regarding wastewater, Lotte Chemical is carrying out
energy Daesan Plant 38,136 38,362 36,203
systemic management in which it introduces recycling process, Ulsan Plant 10,605 8,897 7,084
improves rainwater utilization, and builds a recycling system. Indirect Yeosu Plant 9,092 9,094 9,536
energy Daesan Plant 11,082 11,716 11,370
Ulsan Plant 8,077 7,341 6,050
Energy Saving
Energy Yeosu Plant 0.271 0.268 0.260
Lotte Chemical analyzes energy usage by plant in a comprehen- intensity Daesan Plant 0.272 0.268 0.269
sive way and manages consumption in a strategic manner. Spe- (TOE/MT) Ulsan Plant 0.170 0.171 0.165
cifically, it selects target areas by plant, figures out reduction
methods and practices them on job fields. In addition, we holds
workshops to come up with energy-saving ideas, instills these
ideas into the employees, and shares the direction of practices.
Water Use Waste Discharge Wastewater Recycling

(Unit: tons) (Unit: tons) (Unit: %)
Yeosu Daesan Ulsan Yeosu Daesan Ulsan Yeosu Daesan Ulsan
15,978,426 3,018,477 81.1

2013 12,212,749 2013 1,949,078 2013 84.0
10,651,674 5,749,645 46.0
16,334,268 3,053,536 81.3

2014 13,552,606 2014 1,921,111 2014 85.8
10,307,965 5,478,285 46.9
16,562,628 3,092,672 81.3

2015 12,951,533 2015 2,040,277 2015 84.2
9,860,840 5,307,100 46.2
48
Minimization of Environmental Impact Water Pollutant

Air Pollutant Lotte Chemical operates in-house wastewater treatment plants
To systematically control air pollutants, we have installed a at worksites. Wastewater is also controlled through the TMS
round-the-clock automatic air pollution monitoring system for and wastewater treatment plants in industrial complexes (Yeo-
regular self-inspection, and has also built the regenerative ther- su and Ulsan Plant) an additional time. In addition, we are con-
mal oxidizer (RTO) at air pollutant discharging facilities to pre- ducting systemic and efficient management by introducing
vent pollutants and odor. Furthermore, we introduced a sealed wastewater recycling processes and building recycling systems.
system to prevent the discharge of VOCs into air from storage
tanks, waste water disposal plants, and sampling devices, be-
Water Quality
fore those collected pollutants being incinerated. (Unit: ppm)
BOD Yeosu Plant 37 34 27
Air Pollutant Emissions Daesan Plant 2 2 2
(Unit: tons)
Ulsan Plant 1 8 8
Classification 2013 2014 2015 COD Yeosu Plant 49 46 37
Dust Yeosu Plant 76 73 73 Daesan Plant 21 23 22
Daesan Plant 11 6 5 Ulsan Plant 11 23 10
Ulsan Plant 33 15 15 SS Yeosu Plant 37 37 37
SOx Yeosu Plant 58 37 36 Daesan Plant 4 4 3
Daesan Plant 1 2 2 Ulsan Plant 9 4 9.1
Ulsan Plant 102 89 82
NOx Yeosu Plant 1,802 1,485 1,498 * ‌Differences in wastewater density are attributable to treatment methods such as
the integrated wastewater treatment facilities at the industrial complex (Yeosu
Daesan Plant 11 8 7
Plant and Ulsan Plant 1) and the independent wastewater treatment facilities at
Ulsan Plant 673 392 426 each site (Daesan Plant and Ulsan Plant 2). Wastewater density at each plant is be-
CO Yeosu Plant 53 37 38 low legal standards.
Daesan Plant 2 3 5
Ulsan Plant - - -
* There can be differences in total amount due to round-off. No. of Employees who Completed Environmental Trainings
* ‌Differences in figures of each plant resulted from the existence of boilers. (no boiler (Unit: persons)
in Daesan Plant) Yeosu Daesan Ulsan
12
Toxic Substances 2013 43
Each worksite of Lotte Chemical endeavors to prevent toxic 6
substances from leaking. As a measure, we installed leakage 34

detectors to all toxic sources and blocking equipment. We also 2014 37
adopted the LDAR(Leak Detection and Repair) system, under 25
which we can stop the outflow of harmful substances in ad- 58

vance, perform regular inspection and assessment and offer 2015 48
education and training programs. 183
Emissions of Harmful Substances Environmental Investment Expenses

(Unit: tons) (Unit: KRW in billions)
Classification 2013 2014 2015 Classification 2013 2014 2015
Ethylene Yeosu Plant 15 18 11 Environmental Yeosu Plant 10.1 17.1 17.0
Daesan Plant 13 12 13 management Daesan Plant 18.6 20.4 16.8
Ulsan Plant - - - expenses Ulsan Plant 24.8 26.6 26.7
Propylene Yeosu Plant 10 11 8 Environmental Yeosu Plant 7.7 11.5 14.9
Daesan Plant 16 17 16 investment Daesan Plant 8.1 12.3 23.4
Ulsan Plant - - - Ulsan Plant 3.4 4.2 4.7
Xylene Yeosu Plant - - - Total Yeosu Plant 17.8 28.6 31.9
Daesan Plant - - - Daesan Plant 26.8 32.7 40.3
Ulsan Plant 14 12 4 Ulsan Plant 28.2 30.8 31.3
Acetic acid Yeosu Plant - - -
Daesan Plant - - -
Ulsan Plant 3 4 3
Others Yeosu Plant 92 83 77
Daesan Plant 60 67 61
* There can be differences in total amount due to round-off.
49
Soil Pollution Waste

Lotte Chemical has laid out internal guidelines for the preven- Lotte Chemical strives to keep waste volume at the lowest level
tion of soil degradation. We paved floors of administered facili- through the intensive management of waste-generating sourc-
ties with impervious concrete, so that pollutants do not perme- es. Our efforts include establishing and managing annual waste
ate into the soil. Some areas of the plants, which are vulnerable volume targets, drawing up waste reduction plans, and deriving
to soil degradation need additional rounds of review for thor- enhancement methods for the same. We also practice re-
ough preventive measures. al-name waste discharge system to raise employees’ awareness
on environmental responsibility. It will lead the efforts of cut-
By-products ting down wastes and recycling them as resources through pro-
Lotte Chemical defines substances left from production such as cess improvement and facility investment, based on the per-
steam, hydrogen and gas as by-products, and each plant is ception “Waste is a resource.”
making efforts to recycle it.
Management of Waste Generated

(Unit: tons, %)
Management of By-products Generated
(Unit: tons)
Classification 2013 2014 2015 General waste
By-products Yeosu Plant 2,736,391 2,737,792 2,890,438 Incineration Yeosu Plant 931 2,098 2,638
generated Daesan Plant 3,166,139 3,073,048 3,058,939 Daesan Plant 376 303 535
Ulsan Plant 63,143 53,550 38,990 Ulsan Plant 832 1,175 359
By-products Yeosu Plant 2,736,391 2,737,792 2,890,438 Landfill Yeosu Plant 1,650 1,562 2,519
recycled Daesan Plant 3,166,139 3,073,048 3,058,939 Daesan Plant 782 215 1,461
Ulsan Plant 63,143 53,550 38,990 Ulsan Plant 2,378 15,788 6,369
Rate of Yeosu Plant 100 100 100 Sea dumping Yeosu Plant 1,456 - -
by-products Daesan Plant 100 100 100 Daesan Plant - - -
recycling (%) Ulsan Plant 100 100 100 Ulsan Plant 24,145 - -
Recycling Yeosu Plant 5,143 4,844 5,795
Daesan Plant 4,274 4,723 5,162
Ulsan Plant 10,328 9,937 19,534
Cases of by-product Recycling
Total Yeosu Plant 9,180 8,504 10,952
Daesan Plant 5,432 5,242 7,157
Hydrogen Steam Methane Ulsan Plant 37,683 26,900 26,262
Yeosu, Daesan Plant Designated waste
Source At production of At PC MVR, EO At production of Incineration Yeosu Plant 795 1,281 1,211
ethylene at NC Reactor and NC ethylene at NC Daesan Plant 238 249 336
Heater Ulsan Plant 49 272 105
Yeosu Use as feedstock at Consume all Consume it after Landfill Yeosu Plant 86 45 9
Plant BTX and PE·PP by-products, recycling it to fuel at Daesan Plant - - -
plant and as fuel in after recycling, other plants Ulsan Plant 6 4 7
other sites within the plant Sea dumping Yeosu Plant - - -
Daesan Utilize as fuel at BTX Use within itself or Use for NC plant fuel Daesan Plant - - -
Plant and polymer plant, move to other and for monomer Ulsan Plant - - -
and the remaining plants. EG plant plants fuel and
Recycling Yeosu Plant 13,083 12,749 13,050
amount is sold to uses it, after feedstock, including
Daesan Plant 11,394 12,714 20,027
nearby businesses recompressing at EG and SM
low-pressure
leftover steam Total Yeosu Plant 13,964 14,075 14,270
Daesan Plant 11,632 12,963 20,363
Gas By-product
Ulsan Plant Recycling Yeosu Plant 78.8 77.9 74.7
Source Off-gas from PX production Bio-gas from wastewater rate of Daesan Plant 91.8 95.8 91.5
treatment general and Ulsan Plant 27.8 37.4 74.2
designated
Ulsan Send off-gas to heater and fuel Move bio-gas to heater for
waste (%)
Plant gas surge drum for it to be used supplementary fuel
as fuel * There can be differences in total amount due to round-off.
Local Environment Management

Lotte Chemical has been contributing to building an eco-friend-
ly industrial complex, by turning nearby places of each plant
into environmentally friendly areas. The company set up bird
nests, planted flowers along roads, picked up garbage on trails
and cleaned nearby beaches. These activities have demonstrat-
ed Lotte Chemical’s endeavors to build a refreshing and pleas-
ant area in cooperation with local communities.
50
Eco-friendly Products and Technologies

Lotte Chemical strives to minimize the environmental impact of products and technology, and also strives to develop green products
and technology. Since the announcement of eco-friendly product guidelines in 2011, Lotte Chemical has performed eco-friendly R&D
activities, and invented and commercialized bio PET, Thermoplastic Elastomer and PLA.
Eco-friendly Products
Automotive Weight-reducing Material

Lotte Chemical’s non-painting injection molding technology based on gas counter pres-
sure allows automotive components to weigh less, resulting in CO2 reduction. (More infor-
mation appears on related R&D section)
Thermoplastic elastomer
Thermoplastic Elastomer: LOTTMER®
LOTTMER® is an olefin-based thermoplastic elastomer produced through reactive extru-
sion technology. Unlike thermoset elastomer like rubber, this material can be recycled and
is being spotlighted as environmentally friendly elastomer. Its excellent mechanical prop-
erties, strong formability and durability make it possible to be used for automobiles, elec-
trical and electronic products, industrial and household goods.
Bio PET
Bio PET is an eco-friendly biological resource made of bio-ethylene glycol generated from
biomass (plant resources), becoming a substitute for the conventional PET. This material,
Products made of bio PET
first produced by Lotte Chemical, reduces CO2 in production process by 20%, compared to
the existing PET. Outstanding transparency and formability allow it to be used for automo-
biles, electronic materials and fibers as well as beverage bottles. In 2015, a total of 8,000 tons
was sold, and the sales amount was KRW 10.9 billion.
Advanced Eco-friendly Materials released at Korea International Chemical industry Expo

In May 2015, Lotte Chemical participated in Korea International Chemical industry Expo, exhibiting advanced environment-friendly
and functional materials.
We established the exhibition booth in a green tone in order to give a feeling of green technology of the future. Through the occa-
sion, it released eco-friendly technologies as a new trendy business, such as bio-degradable biopolymer of PLA based on monomer
made from maze, sugarcane
and other natural sources, and
membrane that filters water
contaminated by virus and oth-
er pollutants.
51
Issues 02
Safety
Safety and health is the most critical issue at workplace. As such, the
safety and health system needs to be elevated to global standards to
ensure safety of employees in all stages of business. In particular, each
and every petrochemical business has to prevent toxic chemical out-
flows, fire and explosion, which can damage local communities as well
as workers. Since 2015, the “Act Concerning Registration, Evaluation,
etc. of Chemical Substances” and “Chemical Substances Control Act”
have been in place, and we need company-wide responses to these
laws. In this report, Lotte Chemical introduces its safety and health sys-
tem, related organization and efforts of settling down the scheme with-
in itself as well as management of chemical substances and preventive
actions of chemical accidents.
Our Response
Safety and Enhancement of safety inspection Holding the Occupational Safety and Held the committee meeting regularly to
●
health by worksite Health Committee meeting every quarter evaluate safety and health activities
Rapid reporting and Implementing company-wide response 1. ‌Carried out company-wide response drill
dissemination when emergency drills once or twice a month and twice a month and private-public joint
situations occur private-public joint drills more than drill more than once a year
●
once a year 2. ‌Built a system to report and disseminate
emergency situations in accordance with
scenarios
Reinforcement Response to Act Concerning Building chemical substance 1. Managed
‌ about 24,000 chemical
of chemical Registration, Evaluation, etc. of management system substances which are used in worksites in
substance Chemical Substances and real time ●
management Chemical Substances Control Act 2. Implemented
‌ tracking management of
chemical substance distribution network
Plans for 2016

Reinforcement of Prevention of leakage of toxic Strengthening the construction of storage 1. Strengthened
‌ the construction of
chemical substance chemical substances facilities in worksites storage facilities
management 2. Developed
‌ guidelines for strict - 2018
follow-up measures and
management
Safety and health Establishment of Building a system to report and disseminate 1. Completed
‌ the establishment of
company-wide integrated safety when emergency situations occur the system
management system 2. Conducted
‌ trainings for reporting - 2017
and disseminating emergency
situations
52
Safety and Health System Safety, Environment & Technology Division

Company-wide safety and environment control is headed by the
Safety and Health Strategies Safety, Environment and Technology Division under the CEO. Train-
ings and diagnosis on safety and environment are led by the Central
Safety Committee at each site. We also dispatch experts to partners
• ‌Reporting and disseminating when emergency situations occur
to spread the culture of safety and environment.
• Enhancing safety inspection in worksites
• Preemptively responding to safety regulations Organization for Safety and Health
• Strengthening training and management skills of subsidiaries
CEO
Safety and
Environmental
Lotte Chemical has established a company-wide safety and health General Plant Manager Technology Div.·
system and disseminated a safety and healthy culture that can Environment
Plant Manager and Safety
meet relevant global standards. These actions help the company to (Environment and Safety Div.) Management
prevent safety-related accidents from happening, raising employ- Team
ees’ awareness of safety and making them observe safety obliga- Team Leader·Leader
(Environment and Safety Div.)
tions at workplace.
Environmental
Safety Management Implementation Scheme Safety Planning
Planning Anti-disaster
Unit Environment and
Occupational Safety Management
Air Condition
Safety and Health
Risk Management
High Pressure
Water Quality
Gas·Radiation
Fire·Toxic
Waste
Substances
Intensive Management of
Establishing a Culture of Blind Areas (Subsidiaries, Education for Business
Toxic Substances
Safety (Worksite) Business Partners, External Partners
Transportation)
Industrial Safety and Health Committee
The Industrial Safety and Health Committee, equally composed of
members from the labor union and management, is regularly held
to share related issues and adopt improvements to our businesses.
53
Safety Culture Dissemination among Employees

Lotte Chemical is making best efforts to ensure safe workplaces, by spreading a safe and healthy culture within its worksites as well
as supporting health management of employees and their family members.
Safety Culture Dissemination
Lotte Chemical conducts a company-wide emergency response drill once or twice a

month and an annual private-public joint drill to disseminate the culture of safety. We
also set up scenarios against emergency situations and for rapid reporting throughout
the company. Other activities for safety include holding workshops to discuss and share
responses to accidents and best practices, mutually checking safety between each work-
A campaign to prevent occupational accidents
(jointly with the Ministry of Employment and La- site twice a year, implementing regular trainings to prevent accidents.
bor and KOGAS)
Operation of the Comprehensive Incident Prevention System

A comprehensive accident prevention system is operated for Lotte Chemical to help in early
detection and response to dangers, including gas leaks or fire. The system is on 24 hours.
RC (Responsible Care)
All issues including process safety, health, pollution prevention, emergency response, and
product distribution are managed by the integrated RC system. Executions of the system
Safety support agreement at Daesan plant are monitored and evaluated at each worksite. We also operate a TFT to embed the RC sys-
tem in the company and hold workshops to share relevant information at a company level.
RC Operation System
Self-evaluation on RC (out of 6 points)

(Unit: points)
Gas leakage Classification Yeosu Plant Daesan Plant Ulsan Plant

CCTVs Safety in process 5.2 5.5 5.0
monitoring facility
Employee safety and health 5.1 5.4 5.0
Pollution prevention and environmental protection 4.7 5.4 5.0
Fire pump Fire water Awareness of local communities and emergency response 4.9 5.3 4.7
monitoring facility monitoring system Safety in distribution and transportation 4.7 4.8 4.6
Product responsibility 4.8 4.7 4.4
Weather Automatic fire

observation facility detection facility Signed a Safety Support Agreement
Lotte Chemical Daesan plant signed a Safety Support Agreement with Korea Gas Safety
Corporation. During regular maintenance periods, Korea Gas Safety Corporation staffs
Automatic
accident-free
Emergency phone are stationed at the site. They supported task and information to prevent accidents. In
(air-horn)
recording facility addition, we will host the meeting and research cooperation for accident prevention.
Strengthening Safety Efforts with the Research Institute

Lotte Chemical Research Institute strives in diverse ways to prevent safety related accidents, including fire and gas leaks, and form a
safe workplace.
Safety System Installation within Research Labs︱The institute introduced a cutting-edge supply and exhaust ventilation system
to minimize organic solvent-related accidents. It also installed a special gas detector that sounds an alarm bell in the event of a gas
leakage. Colors applied to the equipment get discharged easily, so researchers know whether they are properly working or not.
Emergency Drill︱Researchers regularly conduct escape and emergency rescue drills, so that they can quickly respond to emergen-
cy situations. Exercises are carried out by themselves, or together with the fire station in their district. Mock-up practices help them
to understand their duty well and take proper action in an emergency.
54
Stricter Chemical Substances Control stances to the wastewater facility, once they leak. In addition,
emergency toolboxes and sand storage boxes are arranged in
At the company level, Lotte Chemical has been making concen- every key area of each plant. Equipment such as fire extinguish-
trated efforts to systemically manage chemical substances and ers, gas masks, protective gloves, suits, boots, and shield are
prevent chemical accidents, responding to “Act Concerning also furnished for all time.
Registration, Evaluation, etc. of Chemical Substances” and
“Chemical Substances Control Act” that have been implement- On-site Chemical Substances Management
ed since 2015. To observe the “Chemical Substances Control Act”, we are mak-
ing efforts to manage on-site chemical substances. We submit-
Chemical Substances Management System ted off-site assessment reports on 36 plants and management
To respond to overseas and domestic regulations on chemical plans of 31 plants, making them public. We drew up follow-up
substances, Lotte Chemical has established a world-class chem- actions, by establishing preventive measures for chemical sub-
ical substances management system. We manage in real time all stances and quick response systems in the event of emergen-
chemical substances, about 24,000 in number, within itself. The cies. In addition, we have bolstered the preventive system of
company also traces flows of chemicals, and controls the distri- toxic chemical materials, by elaborating the handling standards
bution network for the purpose of government reporting and in- of toxic chemical substances, and devising off-site evaluation
ternal management. In addition, sales and purchase of toxic and management plans when chemical accidents occur.
substances subject to regulation are strictly controlled, and the
Material Safety Data Sheet (MSDS) that carries information
about harmfulness of chemical substances, emergency meas-
ures and handling is translated into different languages for dis-
tribution to customers. These activities show the company’s ef-
forts in controlling chemical materials.
Chemical Substance Management Cases

To prevent the permeation of chemical substances, we have in-
stalled protective walls around storage facilities and covered
the floor with impervious materials. Our facilities were de- Toxic chemical substance management
signed in such a way that transports all leaked chemical sub-
Chemical Substance Management System
Management of Chemical
Substance Information Customer Management
Utilizing regulation information and Customers Providing customers with
knowledge about risk management documents necessary for
offered by complying with regulations
LCMS at the design and
development stages
Compliance Management
Supply Chain Management
Preemptively removing risks by
Receiving necessary information in
accurately checking data with
time from suppliers by capitalizing
regard to compliance and safety,
on the e-Procurement system R&D Sales and tracking accompanying risks
Production
Relevant
Procurement
Institutions
Process Integration
Integrate compliance and safety management functions
with major business processes such as procurement,
manufacturing, delivery, quality control, etc.
55
Issues 03
Labor & Human Rights
Securing and maintaining talents and nurturing capabilities of individual
executives and employees are one of the inevitable elements for sustain-
able growth. Companies utilize diversified channels to hire outstanding
human resources who meet their own standards, while observing their
management philosophy. Diverse hiring criteria enable businesses to
employ job seekers who excel in different fields and to contribute to the
balanced development of local communities, by helping them to hire
global talents suitable for relevant jobs that are also outstanding in di-
versified areas and are underprivileged. Talent nurturing and fair com-
pensation plans as well as welfare benefits maximize the satisfaction of
those on their payroll, while preventing turnover. In this report, Lotte
Chemical introduces its strategy and programs designed to hire abili-
ty-based recruitment and escalate the satisfaction of its employees.
Our Response
Development of Development of global talents to Operating the “Regional Expert Program” 1. Built
‌ a regional expert development system
talents target emerging markets for target regions ●
2. Deployed
‌ experts to India, Vietnam, and Peru
Enhancement of language skills for Providing skills to over 70% of total 1. ‌Increased 51 points year-on-year in language
global business employees to work at overseas sites skills, Overseas dispatch level 78%
●
Expanding the onsite language skill 1. Launched
‌ and expanded language skill pay,
support system language fund, language study group, etc.
Establishment of a corporate culture Activating small group communication 1. Spread
‌ the focus group meeting
for communication and cooperation Activating focus group meetings 1. Listened
‌ to the opinions of worksites to ●
enhance EVP and improved HR systems
Respect for Dissemination of the creative Stipulating and proclaiming action plans 1. Held
‌ a ceremony to proclaim the creative
human rights labor-management relationship labor-management relationship ●
2. Distributed
‌ posters and held diverse events
Plans for 2016

Development of Development of global talents to target Building a system to nurture talents who lead Lotte Development of core global talents
talents emerging markets Chemical’s global business
Establishment of a corporate Carrying out labor-management harmony programs Execution of programs for harmony
- 2016
culture for communication and of labor and management
cooperation Providing senior managers with leadership Diagnosis on leadership and
enhancement programs competency enhancement
Enhancement of language skills for Providing skills to over 80% of total employees to Development of talents to be
global business work at overseas sites deployed for overseas service
- 2017
Supporting site workers to upgrade Support for language skill
their language skills enhancement of site workers
Recruitment of Securing global talents in advance Expanding recruits with regional experiences and 1. Recruitment
talents language skills in emerging countries 2. No. of recruits and target emerging
countries
System 1. ‌Improvement of evaluation and 1. ‌Strengthening performance-oriented incentive Improvement of systems
- 2016
improvement compensation systems system
2. ‌Enhancing CSR 2. ‌Fulfilling social responsibility and securing diversity
3. ‌Expanding employee communication 3. ‌Preparing communication systems that meet new
needs of employees
56
Recruitment of Talents Recruitment Strategy

Lotte Chemical set up “those who want to lead change and de-
Lotte Chemical wants to secure talents through ability-based velopment under intense competition and change” and “those
fair hiring process. Through various channels, the company who understand cooperation and mutual survival, not fearing
employs those who fall into its human resources policies, with- failure” as required qualities for its employees. Lotte Chemical
out being deterred by gender, education, or other personal focuses on persons who will grow in the future, rather than fo-
backgrounds. cusing on who he or she is now.
Desired Qualities of Employees
Those who do • ‌Talents who have the spirit to take risks and never give in to failure
not fear failure • ‌Those who find new hope in failure, rather than those who give up on challenges out of fear of failure
Those who • ‌Young talents who do not nurture false hope without effort, and those who develop their own knowledge and
make endless capabilities, to achieve successes out of their true strengths
efforts for • ‌Young employees who know the value of patience and hard work, and who are able to reinforce their fundamental
self-development competences to take a leap forward
Those who
know how to • ‌Talents who know how to cooperate with colleagues, seniors, and juniors
cooperate and • ‌Those who can appreciate people and society
coexist
57
Excellent Talent and Global Talent Recruitment spaces for filling out on job application form that are not relat-
Lotte Chemical strives to secure domestic and global talents ed with the job position to which an applicant applies. Instead,
through diverse channels. In addition to regular domestic and we use NCS that can systematically verify the ability and quali-
international job events, we conduct other activities in order to fication of job-seekers. In addition, we assess only the job ca-
obtain talents before others do, such as selection of scholarship pabilities of applicants through “Spec-Tackle” audition.
students according to industry-academy preferences, hiring
those who hold a doctoral degree issued by overseas universi- Systematic Talent Cultivation
ties, and industry-university related employment. The compa-
ny also employs persons with work experience all year round We have made endeavors to foster outstanding employees with
as a way to recruit human resources in a timely manner, and to global competitiveness through systemized nurturing of core tal-
recruit people with a certificate of special qualifications, over- ents. We aim to provide various talent-developing programs by
seas talents and international job seekers through a two-track position and mission to enhance job expertise and capabilities.
recruitment strategy. In 2015, it set up an HR organization with-
in the research institute, in an effort to acquire research staff Talent Development Strategy
and strengthen its HR pool. We have laid out a talent development roadmap in considera-
tion of expertise by job and offered diversified educational pro-
grams for nurturing experts.
Employment of 47 Researchers
Roadmap for Talent Development

24 new researchers 23 experienced researchers
General course·Basic knowledge training
This course provides education about core values, common attitude and
basic knowledge, all of which are required to those who work at Lotte.
Contract-based Department︱To nurture advanced research
staff in a corporate-oriented manner, we made an agreement
Position-based course·Job training
with Korea Research Institute of Chemical Technology to estab-
lish a contract-based department. Starting from the second half This course is designed to increase job efficiency and strengthen
competitiveness as well as nurture job experts, by offering basic
of 2015, we have been selecting those who are interested in
knowledge and recent trends in certain fields through phased job
studying chemical convergence materials under the employ- trainings and education at expert institutions. It also strengthens the
ment guarantee scheme, and offering them customized re- fostering of future top management and strategic leaders, by providing
performance and capability enhancement trainings by position grade,
search education regarding highly functional polymer synthesis
mostly for manager level employees.
and advanced materials. We aim to offer permanent positions
to those who finish the course with a degree.
Core talent nurturing course·Global training
Recruitment on Diversity This course is intended for those who have the potential to reach the top
management level to advance their strategic thinking and systemize
In 2013, Lotte Group announced the “Declaration on Diversity” management knowledge through MBA and AMP courses in leading Korean
by which we employ job applicants in ways that respect their universities. It is also focusing on identifying and nurturing talents, who are
likely to serve as a foundation of the company’ growth, through the support
diversity in terms of gender, culture, physical condition, and of MBA or diploma courses at domestic and overseas universities. In
age and fulfill our social responsibility. For example, we have addition, other programs, including those of foreign languages and overseas
interchange duty programs, are offered for the global mindset and
offered opportunities to those with disabilities, female ex-mili-
competitiveness of those on the payroll.
tary officers, and international students. We eliminated all
Staff·Assistant Manager Manager Senior Manager Executives
General·Basic
Quality LanguageᆞITᆞMonthly Special LectureᆞCore ValuesᆞPrevention of Sexual Harassment
Education
Petrochemical Academy,
Accounting Academy
Level·Job
Ability Job Capability Certification
Education Essential Training by Grade
System
Job Expert Course Team Manager Qualification New Executive Course
Development of
EMBA CourseᆞBusiness SchoolᆞGlobal School Course
Core Talents·
Country Expert CourseᆞGlobal Expert Course
Global
Competency
Overseas Interchange Duty Program
Education
58
Support for Degrees, Diplomas and Certificates Local Expert Fostering Program
Lotte Chemical provides tuition to researchers who are in doctor- We foster local experts with global mindset based on the “glocal-
al and post-doctoral course, in order to foster core research staff. ization*” strategy. We aim to dispatch these core talents to stra-
In addition, the company encourages employees to earn job cer- tegic global business posts, making them learn local language
tificates that are related with their mission, based on the idea and culture, as well as build human and business networks for
that higher competitiveness of members leads to the growth of the establishment of business foundation.
their organization. The company supports those who apply for *‌Glocalization: A
‌ term coined through the combination of globalization and
master craftsman practical processes offered in connection with localization
Korea Polytechnics with tuition and textbook expenses as well as
other financial support, such as application fees and reward
money when they receive admission letters from college. Language Learning Support
We provide individual/group foreign language courses, including
in English, Chinese and Japanese, and compensate language
test expenses and tuitions when our employees take a language
test and attend external classes for language. We run diverse in-
centive programs such as tuition compensation for those who
received modest test scores, allowances for those who acquired
excellent scores, and textbook expense compensation for study
groups, to motivate employees to be globally competitive in for-
eign languages.
Education·sales academy Fair Evaluation and Compensation

Lotte Chemical pursues fair capability evaluation and remunera-
tion for all their employees. We operate different performance
management systems to provide incentives for self-develop-
ment. We help them strengthen their capabilities and manage
their career, by regularly evaluating their abilities and providing
them with adequate feedback.
Employee Evaluation Process
Education·chemical engineering academy
Job training Academy for Chemical Production,

Sales and Accounting Staff
We have provided specialized education by job to enhance job
capabilities and productivity. For instance, we annually open 1st
Self-evaluation Objection
chemical academy to help improve understanding of chemical evaluation
products and production processes and sales academy, so that
all those in the sales division strengthen their ability not only as
an individual but also as an organization. In addition, the com-
pany gives new recruits training on production process and ac-
counting as part of OJT program, to help them achieve soft-land-
ing at the earliest.
Employee Education Status

(Unit: hours, persons) Announcement of Ratings 2nd
Classification Unit 2013 2014 2015 evaluation results adjustment evaluation
Total education hours 230,287 251,440 360,671
hours
Total number of persons 2,539 2,739 2,800
employees
(persons)
Education hours hours 90.7 91.8 128.8
per employee
59
Performance Evaluation Process Protection of Employee Rights

Our performance evaluation system is divided into two parts,
personal evaluation (MBO* & capability) and organizational We seek a sound labor-management relationship that can grow
performance evaluation (KPI). For personal evaluation, every through mutual respect and cooperation between the compa-
employee sets up his or her annual targets under the Manage- ny and its employees. We aim to build a desirable relation with
ment by Objectives (MBO) system and is evaluated on their ca- mutual existence and collaboration, by forming a rational cor-
reer and performances once a year. Results are used for promo- porate culture between labor and management and guarantee-
tion and performance-based bonuses. In addition, we motivate ing rights of its employees.
employees to take initiatives for self-development and enjoy
the sense of achievement, by running an incentive bonus sys- Vision of Labor-Management Relationship
tem that rewards individuals and teams with excellent job per-
formances, including in production and sales.
*‌MBO : Management by Objectives
Employee Evaluation System Global Top 10

Chemical Company
❶ ‌Personal evaluation
Performance evaluation (MBO evaluation) +
Competency evaluation (common (core value), leadership, job
competency)
❷ ‌Evaluation of organizations
❸ Company-wide performance
❹ ‌Comprehensive evaluation
Personal evaluation is reproduced according to the adoption rate
by position
• ‌Performance-based compensation: Personal evaluation +

Company-wide performance Labor-Management Culture based on Principles and
• Accumulated evaluation of merits: Comprehensive evaluation Communication that Pursues Growth Together
• Scholarship: Comprehensive evaluation
• ‌Sharing the vision
• Promotion: Comprehensive evaluation • Promoting the vision
Establishing
• Executing the master plan for labor
Vision
• ‌Gaining a momentum for trust
between the labor and management
Cooperative
Employees to Receive Regular Performance and Career Labor-
• ‌Creating programs to practice the
Development Reviews Management
vision
(Unit : %, persons) Relationship
• ‌Fostering sound and healthy labor
Internalizing
Classification Unit 2013 2014 2015 union
Vision
Percentage % 41 47 41 • ‌Building the vision promotion system
Number of target persons 1,049 1,152 1,145 by site (Sub-group vision)
employees • Monitoring·evaluation·feedback
• ‌Activating communication channels

(Labor-Management Council,
sub-group meeting, etc.)
• Realizing GWP
Communal
- ‌Workplace where employees want to
Labor-
Level Up go to work
Management
- ‌Workplace where employees show
Relationship
off to their families
• ‌Beyond the pursuit of salary and
benefits → stable employment and
quality of life
• ‌‌Creating a new labor union model

- ‌Corporate development = Individual
growth
Labor-
• ‌Fulfilling social responsibilities jointly
Management
by the labor and management
Relationship
Fulfillment • ‌Open Management·Co-prosperity
with
Management → A pillar of corporate
innovative
management
values
• Work-life balance
- Workplace = Family = Individual
(growth together)
60
Better Labor-Management Relations Employee Council

Lotte Chemical has been striving to forge a sound labor-manage- We hold employee councils on a regular base. The meeting is
ment relationship. The company operates organizations for bet- convened quarterly by each worksite for various discussions per-
ter communication and cooperation, including Labor-Manage- taining to policy improvement between the labor and the man-
ment Council and Site Operation Committee, and runs diverse agement. This year those debates dealt with meal allowance in-
channels, such as events for communication, labor-management crease, ceiling adjustment of in-house house loans and
workshops and onsite meetings, to build mutual trust and coop- improving the workplace environment.
eration between them. As for critical changes in its businesses, it
discusses with the labor union in advance to share ideas and in- Retirement Support Program
still cooperation. Lotte Chemical operates a retirement pension plan to help em-
ployees to secure stable source of income after retirement. We
Grievance Handling Program offer related education programs to employees once a year, in-
Lotte Chemical understands job grievances of its employees, be- troduce the operation of retirement pension plans and provide
fore laying out immediate and concrete solutions through a griev- job training and retirement process information from recruit-
ance-handling program. The company is working hard to ration- ment to retirement.
ally deal with diverse difficulties with regard to human rights,
anti-corruption, no discrimination and workplace improvement. Ban on Child Labor and Forced Labor
To this end, regular communication channels between depart-
We ban child labor and forced labor not just at the headquarters
ment managers and their members have been set up to handle
but also at all worksites. We conduct annual inspections at en-
distress immediately. When those complaints are not addressed,
sure there is no forced labor or child labor. In 2015, we thorough-
they are submitted to the Labor-Management Council.
ly prohibited such labor, and we have no issues of child and
forced labor.
Declaration of Creative Labor-Management Culture
Lotte Chemical Yeosu Plant held the event of “Declaration of Cre-
No Discrimination and Observance of Human Rights
ative Labor-Management Culture” and made an announcement
on co-prosperity management and family management that In 2013, we announced the ‘Declaration on Diversity’ that illus-
gives happiness to those working at the plant through sustaina- trates our respect of diversity in terms of gender, culture, physi-
ble growth. Some 100 persons, including the CEO, labor execu- cal condition, and age. By observing this, we respect human
tives and chairpersons of labor committee of each plant, other rights and peculiarity of individual employees, and strictly forbid
employees and head of Yeosu district, participated in the event discriminatory treatment due to gender, age, religion, disability,
and discussed requirements of business management activities, geographical background, political bent and education. In addi-
via cooperation and trust between the two, and ways of practic- tion, we prevent improper actions and words, including sexual
es, based on consensus on sustainable growth in a systemic and harassment and assault and violence from happening, and pro-
concrete manner. Practical issues of both the sides were written hibit unfair treatment due to reasons of education, geography
on paper and announced publicly to emphasize, “Action accom- and blood ties. We also offer anti-sexual harassment and other
panied with accountability”. We will continue to spread the la- human rights education in preparation for human rights infringe-
bor-management culture, through diversified activities, includ- ment, in the event of unfortunate eventualities.
ing posters and food events of making and sharing Kimchi.
The Charter of the Labor and

Participants in Education on Human Rights
Pledge on Conduct
Management
(Unit : times, persons)
1. ‌Respect for the management 1. Creation of corporate value Classification Unit 2013 2014 2015
and labor rights to realize - Organizing the “Creative Prevention No. of times 10 10 10
affinity management and Dream Team” (product of sexual educational
co-prosperity enhancement through the harassment sessions
2. ‌Problem solving through improvement of quality and
No. of persons 2,539 2,739 2,800
communication working environment)
employees
2. ‌Creation of employee
3. ‌Awareness of growth targets targeted
happiness
for sustainability No. of persons 2,539 2,739 2,800
- ‌Welfare benefit programs
management employees
considering “Lifecycle”
completed
4. ‌Realization of the value of (expansion of welfare
Other No. of times 5 5 5
creative labor-management pension and daycare center,
programs* educational
relationship lifecycle-based financial
sessions
plan, etc.)
3. ‌Creation of social value No. of persons 142 138 165
(continuous job creation, employees
mutual growth with partners, targeted
systematic social No. of persons 138 132 147
contribution activities by the employees
“Charlotte Service Corps”) completed
61
GWP(Great Work Place)

We offer industry-leading levels of welfare benefits to our employees. Through a balance between work and life, we aim to help them to
become more occupied and efficient in work. In addition, we will form an advanced workplace environment.
GWP(Great Work Place) Vision
Encouraging well performing Unconstrained

Work-life balance
organizations corporate culture
Building an active organizational culture connected with productivity and core values
Performance-based GWP Activation of communication Work, family, and individual
• ‌Rewarding organizational units which achieved • ‌Eliminating egoism among divisions • ‌Forming a consensus by operating the Work&Life
excellent performances and core values • ‌Building an open organizational culture among Balance Program that pursues personal health
• ‌Inspiring working desires and motivating levels and organizational units
employees
Result of Organizational Culture Improvement
Lotte Chemical made multi-faceted efforts to build a sound organizational culture, end-
ing up with various good results. Communication channels between organizations have
settled down, and the total “organization effectiveness” index rose by 1%. “Organiza-
tional effectiveness” index is a composite of “tangible career development opportunity”
index, up 3%, “motivation” index, up 3%, “balance between work and life” index, up 1%,
and, “vision/strategy” index, up 4%. Besides, the company was chosen as “Good Com-
pany in Gender Equal Employment” in 2015, and was given the Labor Minister’s Award
for this recognition. MBC News Desk, a Korean TV news program, covered the company
on the occasion of “Women’s Day 2015.” Seen above, we are making various achieve-
ments in the area of gender equality.
Employee Satisfaction 2016 and Mid to Long-term Goal

(Unit: points)
Through corporate culture improvement activities at group-level, we aim to establish a
78 points flexible organizational culture in 2016. We will also enhance employees’ sense of bond
and pride, by improving ways of doing business by ourselves, and facilitating internal
Male 79 points, Female 74 points
communication. In addition, as a global-leading company, we will proactively foster fe-
male talents, responding to prevailing trends, and assist the culture of respecting diver-
2013
sity to take root.
65
2014
GWP Program
77
2015 78
Our various welfare benefits heighten job productivity and satisfaction level. We also
aim to increase the value of employees, by operating the organization in a creative way.
We will establish a workplace of which they can be proud and where they work happily
62
Family-friendly Policies
Lotte Chemical has a organized team in charge of family-friendly management and ap-
plies KPI to it that factors into organizational culture and communication programs. The
company makes it mandatory for its employees to take leave for childbirth, childcare
and childbirth of spouses. When the childbirth leave comes to an end, parental leave
subsequently follows it. Moreover, the company minimizes the effect of leave, by sup-
porting those who were on leave with continued career development. The period of
leave is counted as work years, and those who opted for leave are not treated unfairly in
Daycare center at the Research Institute calculating working years for promotion and grade upgrade. In addition, every Wednes-
day and Friday are designated as ‘Family Loving Day’ when employees enjoy time with
their beloved ones. In-house childcare centers are available for free and ease the burden
of child rearing of employees. Eco-friendly construction materials were used in these
childcare centers to ensure a healthy and comfortable environment. The company plans
to expand the number of these centers to accommodate more children down the road.
Balance between Work and Family︱We renovated the ladies’ dayroom, reserved park-
ing spaces, and reduced working hours for pregnant employees, and recommended one
year childcare leave. Adding to that, we provide in-house childcare centers free of
Flexible work system charge.
Leave Office on Time︱For one month, August 2015, we implemented a “Leave Office on
Time at Six on Wednesday” project, which was designed to promote Family Loving Day and
encourage workers to go away from the office. We calculated the time of departure of
teams, based on the time when their personal computers were turned off. Those teams
whose average leave time was within the top 10 were awarded prizes, including movie tick-
ets. We hoped to create a family management culture in a natural way through this event.
Family-friendly Management︱We gave gifts to our employees (including partners and

subsidiaries) at the time of traditional Korean holidays and Family Month. We also provid-
Best family friendly management ed our employees whose children were taking the college scholastic ability test, with
Chap-ssal-tteok(glutinous rice cake), and Yeot(sort of Korean taffy), as a way to wish them
luck. When our employees or their family members are hospitalized, we send them fruit
baskets. These are practices we performed to implement a family friendly management
culture, and demonstrate that the CEO and the company care and consider them. We also
presented our employees with vouchers of Lotte World and Gimhae Water Park, as well
as resort facilities to increase their loyalty to Lotte Group and recognize their hard work.
More Active Communication and Cooperation

We hope to make the feeling of bond and cooperation stronger, by facilitating a communica-
tion culture among employees, as well as between the company and employees. Led by this
atmosphere, we hope to produce an unrestrained corporate culture that can continuously
generate creative and innovative ideas.
More Focused Group Meeting︱We have conducted sub-group communication meetings to

break down barriers among departments and positions, which were erected through business
“Look After My Team” project
acquisition and organizational expansion. For example, we grouped newly promoted manag-
ers, female managers, residential staff members who returned to Korea and new employees
with work experiences, at various locations. We then made them conduct regular meetings
and exchanged Q&A and feedbacks with the CEO. Through this program, we were able to re-
duce conflicts or job inefficiencies within the organization and reduce ideas of turnover.
“Look After My Team” Project︱We arranged a venue of practical communications between

teams in order to tackle problems that organizational merger and change may bring about.
“Look After My Team” project
This project, which was run for three months in 2015, matched two teams every Tuesday and
Thursday in a relay manner to arrange a team-networking opportunity.
63
GWP(Great Work Place)
Athletic Competition︱In 2015, we held team-level athletic competitions under the

leadership of team managers who took into account his or her team schedule. We
planned this event as a way to strengthen communications among members, and make
an organizational culture flexible. Through this event, we revived team atmospheres and
will strengthen teamwork so that we can realize Vision 2020.
Hope Day with the CEO︱We held “Hope Day with the CEO” where staff and assistant
Athletics competition
managers who had been promoted to the position two years ago or less, all of whom
were working at headquarters, exchanged different ideas and had Q&A sessions about
human resources and other policies. We will reflect them in our policy and management.
In addition, we staged diverse events through which top management recognized the ef-
forts of the lower level employees and boosted their morale. Examples are “filling out
the board by juniors”, communications with the CEO, recreational activities, UCC watch-
ing, talent show and raffles. All these programs displays that we strive to build a vibrant
workplace circumstance. Going forward, we will put in all-out efforts to create a two-way
HOPE DAY
communication and a wide-open culture, by continuously offering opportunities
through which those in upper and lower position are able to communicate each other.
Electronic Newsletter “Doran-doran”︱Lotte Chemical publishes a bimonthly in-

house electronic newsletter “Doran-doran”, as a communication channel. The bulletin
carries major issues, group activities, stories of worksites and introduction of a team.
HOPE DAY
More Diversified Welfare Benefits

Lotte Chemical has introduced various welfare benefits to handle grievance and bust stress of employees.
Individual Nurturing Consultation System︱We have designed and operated a career development system that leads individual
employees to capitalize on their strength and capabilities when drawing up their profession plan. After consultation about his or her
mid and long-term career goal with his or her team manager, he or she shares the plan with the HR team and those who are in
charge of labor. This system helps employees to develop plans of education, training and job rotation and to address grievances that
they meet in the course of career development.
Female Talent Nurturing︱Led by Lotte Group’s underlying management philosophy of “mining and nurturing female talents”, we
are recruiting more women talents than before and eliminating inconveniences they underwent in daily career life. For example, we
operate shower booths and dayrooms for females, and parking lots and curtailed working hours for the pregnant. In addition, we
hold a meeting with female employees for more active communication, and operate a grievance-handling program, as well as hand
out a guidebook only for female talents.
Health Management Program︱We present regular, special and external general medical check-ups on a periodic basis for health
management of employees. We regularly offer comprehensive health examination to their family members as well. In addition, we
introduced company-wide non-smoking campaigns, which allows smokers to smoke only at permitted areas.
64
Overseas Industrial Field Trip︱As a reward for the hard work of employees who con-
tributed to improving the bottom line of 2015, we offered overseas industrial field trips,
a five-day package to China and a six-day package to Cambodia, to those who were cho-
sen as excellent performers by worksite. We provided the overseas inspection occasions
as an opportunity to refresh themselves and renew the sense of being included in the
company, as well as provide motivation for better job performance.
Overseas industrial field trip for model employees

Club Activities︱We want to make our employees have a sense of pride and loyalty to
the company as well as a feeling of being bound to each other. To this end, we prepare
group-wide baseball matches and a cheer-leading contest for Lotte group’s baseball
competition. In addition, we encourage them to enjoy other activities, including soccer,
baseball, golf, cultural event, marathon, tennis, fishing and mountain climbing, as a way
to bust their stress.
In-house club activities
In-House Mentoring System

We help new entry-level employees to adjust to the company through the mentoring system. Mentors selected in consideration of
their position and job share work experiences and self-development knowledge with mentees for five months. They also exchange
their ideas about other topics, including hobbies, thereby forming a close relationship.
Sharing Hobbies and Cultural Life

Our employees has joined hobby and culture sharing activities such as watching musicals, going rock climbing, and studying literary
criticism, which enables them to share their values and philosophy of life and give a chance to pursue mutual growth.
Joint Trip to Taiwan

The “Bromance” team consisting of mentors and mentees at the head office had a trip to Taiwan to make special memories away
from work and routine.
Lunch time for mentoring Mentors’ and mentees’ joint trip to Taiwan
65
Issues 04
Supply Chain Management
As the scale of business continues to grow, the need for managing sup-
ply chain systemically is ever growing. We need to control the whole
process of the supply chain, from purchase of raw materials to product
sales to aftersales management, and keep the quality of products and
services consistent, thereby improving brand value and image of the
company. Laying a ground of sustainable growth, by realizing fair
transaction and mutual growth throughout the supply chain, is one of
the critical elements. In this report, we introduce Lotte Chemical’s ef-
forts to prosper and grow together with all suppliers, through fair
transactions and mutual growth programs.
Our Response
Shared growth Increase support for sales Increasing sales of partners at 1. Increased
‌ supply prices: Paid additional
home and abroad KRW 778 million to 6 partners
●
2. Support
‌ for the exports of domestic
partners: KRW 8 billion for 19 companies
Financial support Increasing finance for the shared growth Raised a total of KRW 135 billion
●
fund (KRW 67.5 billion from Lotte Chemical)
Technological support Increasing technological support and joint 1. Selected and implemented 41 R&D tasks
research 2. Conducted
‌ product analysis and properties
●
measurement (919 times) and supported
R&D workforce and technology (1,588 times)
Others Increasing managerial support to partners 1. Supported
‌ innovation activities of partners
2. Supported
‌ participation of partners in
●
overseas exhibitions: Chinaplas 2016
(3 partners)
Plans for 2016

Shared growth Increase support for sales increase Increasing sales of partners at home and Increase of supply prices and export
- 2016
abroad performances
Financial support Using finance for the shared growth fund Increasing finance for the fund and
- 2016
for use
Technological support Increasing technological support and joint Selection of tasks and technological
- 2016
research support
Others Increasing managerial support to partners Direct and indirect support for
- 2016
management activities of partners
66
Fair Transaction 7 Factors of the Compliance Program
Encouragement of well • ‌Announcement of interest and intention to

We aim to launch a foundation for mutual growth, by establish-
performing organizations follow corporate compliances
ing fair transactions with partners. We have been striving to
Appointment and • ‌Appointment of the Compliance Officer who
form a virtuous transaction culture in management. operation of the possesses both a strong sense of responsibility
Compliance Officer and authority
Compliance Program Preparation and • ‌Establishment of a guideline for

distribution of a manual business conduct
Lotte Chemical has been running the Compliance Program
• ‌Provision of accurate up-to-date information
since its introduction in 2006. As an effort to prevent unfair Establishment of
• ‌Establishment of a methodical and efficient
documentation system
transactions and corrupt practices, we prepared and distribut- management system
ed fair transaction guidelines as a job manual. In addition, in- Operation of training • ‌Implementation of on-/off-line trainings for at
house instructors who hold a certificate of compliance expert, programs least two hours every half year
offer regular training courses. Chief compliance officer reports Setting up the monitoring
• ‌Establishment of an internal supervision
system, which provides early provision and
overall fair transaction issues and operation results to the BOD system
rectification
annually to manage them on company level. The company en-
• ‌Preparation and operation of disciplinary
deavors to create a fair transaction environment, by performing measures to regulate employees who violated
in-house reviews on transactions of major business units, re- Restrictions on violators related regulations
• ‌Punishment of violators including
ceiving opinions about all business areas, including new busi-
disadvantaged personnel actions
nesses, and sales and purchase from in-house experts, and ex-
tending CP-related activities to our subsidiaries.
Clean Holiday Campaign Gift Return Center

Led by the will of the CEO, Lotte Chemical has implemented a The Gift Return Center is in operation for the return of any gift
campaign of ‘No Giving or Receipt of Gift’ during traditional Ko- received from stakeholders on traditional holidays or promo-
rean holidays for its employees and partners since 2012. In tion. Gifts with no address or in risk of becoming spoilt are do-
2015, all employees were notified of a ban on receiving any gift nated to the local communities, fundamentally preventing our
or any item with monetary value, how to deal with gifts re- employees from any bribe and corruption.
ceived unavoidably, and the standards of transparent perfor-
mance of duty. We also sent official letters to 1,700 of our cus-
tomers and partners to enable them to cooperate in this effort.
67
Mutual Growth Activities

We have pursued mutual growth in practical ways, to establish a fair transaction order with partners and to enhance competitiveness
among them. We, as a sustainable business partner, have performed our managerial activities in a way that builds trust, mutual
growth and development.
Mutual Growth Implementation System
Lotte Chemical’s Mutual Growth Mutual growth at Lotte Chemical is promoted through supporting partners’ competency
Management enhancement, building trust and fair trade culture, and operating an inclusive organiza-
tion. Particularly, the Mutual Growth Bureau lead the establishment of strategies, direc-
• ‌Supporting competency tions, and supporting programs for mutual growth. In addition, performances in mutual
enhancement of business partners growth, compliance, and the level of communications with partners are adopted to the
• Operating
‌ an organization for KPIs for the evaluation of executives in order to boost mutual growth with partners.
mutual growth promotion
• Strengthening
‌ mutual trust and
building a culture of fair transaction Mutual Growth Bureau
The Mutual Growth Bureau chaired by the CEO is responsible for building strategies, im-
plementing and monitoring action plans, and improving imperfections. Managers of
teams regarding planning, procurement, research, training, legal affairs, and production
join the Bureau to manage company-wide mutual growth activities.
Chairperson of the Mutual Growth Committee

CEO
Director of the Mutual Growth Bureau
Executives in Charge of Mutual Growth
Head of Mutual
Planning Procurement Production Sales HR Legal Affairs R&D
Growth Team
Mutual Growth Program

Based on a concrete implementation system, we provide our partners with practical and sound co-prosperity programs on the mid
and long-term perspective, instead of short-term supports. Going forward, Lotte Chemical will create an industrial ecosystem that
helps the Korean economy go vibrant.
Industrial Innovation Movement

Lotte Chemical, together with the headquarters of the Industrial Innovation Movement, provides customized consulting services to
business partners. In 2015, the company had achievements in quality improvement and environmentally-friendly competitiveness,
by achieving sharp reduction of costs and dramatic yield increase at SR Technopack.
*‌Industrial Innovation Movement: ‌A mutual growth program in the private sector where large companies help small and medium-sized enterprises innovate management and
production technology, as well as make technological innovation and seek and share improvement in production process and workplace
environment.
Supporting Exports of Excellent Partners

We support our partners when they make forays into overseas markets. We provide them with a chance to apply their technology to
Lotte Chemical’s plants in foreign countries. We share the information of their excellent equipment and materials, as well as technology
with Lotte Chemical Titan, one of our overseas subsidiaries, in order for them to have an advantage when entering global markets. We
also intend to present good partner companies with bidding opportunities, and guarantee long-term business transaction. In addition,
we are putting in best efforts to support their exporting business through our residential staff members located throughout the world.
68
Expand Sustainability of Partners

Lotte Chemical offers complimentary education to employees of partners via Mutual
Growth Academy. By offering diverse educational courses, including those of manage-
ment, jobs, foreign languages and leader nurturing, we strive to bolster their capabilities.
In the meantime, we support partners with a systematic management for safety and envi-
ronment improvement. As a part of this, we hold monthly safety meetings with business
partners to share information about the current status of security and health control, and
relevant laws and regulations. Moreover, we have strengthened the communication
Plastic Technology Innovation Forum
channels with partners via safety and health communities. In particular, we conduct reg-
ular safety and health inspections to proactively prevent any potential accidents.
Financial Support to Partners

We have raised a Mutual Growth Fund worth a total of KRW 135 billion as of the year-end
of 2015, and have provided small and medium-sized business partners with financial
support. They can borrow money from the fund at lower interest rates than the market
rates by 2 to 3 %. The fund that became operational in 2010 has provided loans to a total
of 130 business partners by the end of 2015.
Plastic Technology Innovation Forum

The first Plastic Technology Innovation Forum where executives of 50 plastic processing
companies in Busan and Gyeongnam region, as well as the head of Lotte Chemical Poly-
mer Business, and the head of the research institute participated, provided the introduc-
tion of the overall status of petrochemical products, solutions to customers’ difficulties
through technological education and consultation, and opportunities of co-develop-
ment. The meeting is expected to extend its scope of invitation to all parts of the nation
on a regular basis, and share details of market situation of the product and detailed infor-
mation of technology, thus establishing a true mutual growth relationship and setting a
cornerstone for long-term partnership.
Industrial Innovation Movement Best Practice

SR Technopack is a company that produces carton packs for milk and juice. Through an industrial innovation movement in collabora-
tion with Lotte Chemical, it was nominated as an excellent company in the movement, and was given award of the Minister of Trade,
Industry and Energy in September 2015.
1. Performance in Implementing Major Tasks
Implementation Task Details

Onsite diagnosis, establishment of Implementation of tasks for
infrastructure for innovation improving worksite environment and
activities, and onsite arrangement saving costs
3 Righteousness and 5S activities Safe works and improvement of
working environment
Education and change management Trainings on the awareness of
innovation, innovation cases, and
innovation methods
SR Technopack
2. Result
SR Technopack reduced annual costs by KRW 77 million, by optimizing the MB mixing ratio of IMD 85 pi product and recycling used EA
through filtering. In addition, the company came up with KPI by different block at worksite, allowing efficient implementation of man-
agement by performance and objective. Industrial innovation movement became an opportunity for those who worked at the compa- 69
ny, to understand the importance of cost reduction, innovative mindset, quality improvement and delivery date observance. In addi-
tion, the movement established a safe work environment and strengthened their innovation capabilities.
69
Issues 05
Customer Value
Customer satisfaction with and trust towards a company is a driver that
promotes its growth and advance. Transferring and sharing corporate is-
sues is carried out rapidly, particularly these days, due to ubiquitous
communication channels of social networks services. Responding to
this, a number of businesses are striving to enhance levels of customer
satisfaction through communication, brand awareness improvement,
and quality management. In this report, we introduce Lotte Chemical’s
program, communication channel and quality management, all de-
signed to elevate customer satisfaction.
Our Response
Customer Customer satisfaction survey Regular monitoring of customer satisfaction Continued satisfaction survey and feedbacks ●
communication Awards to best customers Invitation of customers and continuous Continued award events
●
communication
Invitation of couples of customers Invitation of couples of customers to Supported cultural activities of customers
●
watching movies
Invitation of customers for green Customer communication by region Continued supports,
●
communication by region Sports activities for communication
Mutual Supports for technology trainings to Trainings on processing technology for Conducted technological exchange with
●
growth customers polymer customers customers’ working-level staff
Technology trainings of business Supports for product and technology Enhanced business partners’ knowledge on
●
partners trainings to business partners products
Sponsorship of the Creative Sponsorship of the Plastic Technology Expanded customers’ participation through
●
Management Center Innovation Forum sponsorships
Supports for educations to the Educational supports to the Continued supports
●
next-generation leaders group next-generation leaders
Supports for facility maintenance In-depth supports to requirer Continued supports ●
Plans for 2016

Customer Customer satisfaction survey Regular monitoring of customer satisfaction Feedbacks on quality - 2016
communication Awards to best customers Invitation of customers and continuous Continuous execution
- 2016
communication
Customer communication by region Customer communication by region Continuous execution - 2016
Mutual growth Supports for technology trainings Trainings on plastic processing technology Continuous execution - 2016
Supports for educations to the Educational supports to the next-generation Continuous execution
- 2016
next-generation leaders group leaders
Supports for facility maintenance In-depth supports to customers who require Continuous execution
- 2016
supports
Customer communication Participation in the Chinaplas 2016 1. Increase
‌ of corporate image
- 2016
2. Scale of visitors
70
Customer Value Creation the 39th anniversary of the foundation of Lotte Chemical, we
held an award event with 11 customer companies accompa-
Lotte Chemical intends to create customer value, led by cus- nied by a luncheon. The CEO of the company, heads of Polymer
tomer-centered thinking and activity. The company aims to and Monomer Business, leaders of each responsible BU, and
convey new values to its customers through quality innovation team managers took part in it and exchanged their ideas, form-
and improved communication. ing a relationship with them.
Customer Satisfaction Management Customer Invitational Program

We plan to generate customer value and carry out customer Lotte Chemical regularly invites customers to its technology
satisfaction management, by improving product quality and seminars and business meetings. Daesan Plant and Yeosu PP
strengthening communication with customers. We will reflect plant held customer invitational technology seminars (Polymer
ways of improving our business in the management and estab- University) regarding markets of LLDPE Melt film and lamina-
lish trust relationship with customers, through continuous tion film. Lotte Chemical’s research staff and working-level per-
communication with them. sonnel participated in it, and exchanged useful information
about polymer technology with customers. We also sent a let-
Award Ceremony ter to customer companies in the region of Seoul, Gyeonggi and
As part of our efforts to escalate customer satisfaction, we invit- Incheon, inviting their CEOs and spouses to take part in a busi-
ed our best customers to a prize ceremony. In 2015, marking ness meeting and a promotional event.
A ceremony to award excellent customers Polymer school
71
Enhanced Communication with Customer Sports Marketing

Lotte Chemical regularly arranges venues of communication, in- Lotte Chemical delivers a friendly brand image to customers
cluding for customer satisfaction survey and invitational events. through diverse sports marketing activities. We raised aware-
Through those programs, the company collects customer’s ideas ness on Lotte, by sponsoring the LPGA Lotte Championship that
and reflects them in its product and service improvement. was viewed by approximately 250 million households in 170
countries. We also became a sponsor to world-renowned golf
Customer Satisfaction Survey and marathon events. By doing so, we exhibited our logo and
We survey customer satisfaction throughout the entire process, brand on billboards, webpages and PR materials. Such publicity
starting from product manufacture to aftersales management. helped us to boost sales and increase brand exposure. We also
The result of the survey is taken into account when we consider sponsor a professional baseball team in a proactive manner.
ways of improving our quality management. Proposed ideas
are notified to related departments for necessary steps, which
clearly demonstrate that we are attentive to the views of our
customer. Thanks to the surveys, customer satisfaction levels
in 2015 rose to 80.6%, a 2.8% point increase, year-on-year,
maintaining a growing momentum since 2013.
Customer Satisfaction Survey Result

(Unit: points)
80.6 points Lotte Giants’ baseball class
2013 75.8
2014 77.8
2015 80.6
• Target: Domestic customers

• Questionnaires:
‌ Quality of raw materials, packaging, order,
delivery, sales activities, pre-/post-management, etc.
Sports marketing
Airport Billboard Advertisement Participation in Chinaplas 2016

To promote a positive corporate image and deliver corporate Following 2014, Lotte Chemical participated in Chinaplas 2016,
ideas, we have installed advertisement billboards of our com- Asia’s largest plastic and rubber industry fair, held in Shanghai,
pany in Yeosu and Ulsan Airport since 2013. By carrying publici- China in April 2016. The fair attracted more than 3,200 domestic
ty in the airports near our plants location, we can make our and global petrochemical companies, including major global
employees feel proud, and display our brand to domestic and firms such as DuPont, BASF and Dow, and some 120,000 visi-
overseas customers. Those installments will be standing there tors. Our status as a global petrochemical player was escalated
until 2017, and we expect the positive effects of this advertising by showcasing excellent products and technologies at the fair.
to continue.
Corporate image advertising in the airport Chinaplas 2016
72
Quality Management
We plan to create customer value by improving product and service quality and ensuring safety. We will unveil specific plans and activi-
ties, including a clear definition on and accountability for customer safety throughout the whole process from product development to
product usage, as well as support of quality innovation to customer companies.
Product Liability to Ensure Customer Safety

Lotte Chemical strives to secure safety in the whole process of its products. In this regard,
we established product liability rules, protects consumers from damages or defective
products, and purchased product liability insurance. In addition, we provide the informa-
tion on documents required by the laws of the country to which our products are export-
ed, so that ways and means of transportation and handling are clearly conveyed.
Obtaining the ISO 27001 Certification

Lotte Chemical obtained the ISO 27001 certification, an international standard for infor-
mation security management system. We abide by the laws and regulations with regard to
information security in accordance with international standards, thus preventing the risk
of information leakage and building a global-level security system.
* ISO 27001: ‌This is an international information security management system drawn up by the ISO. The certificate is one of the
world’s most authorized recognitions in the field of information security, and is given only to those companies that
ISO 27001 certification meet 114 controls in 14 groups, including those on the organization’s information security policies, intellectual
asset management, and physical and environmental security.
Effort to Increase PIA* Market Share

We made entry into the Korean PIA market in 1998. Though we were a latecomer, we have
competed against major global petrochemical players and achieved recognition in prod-
uct excellence and competitiveness, as is obvious with the market share and quality repu-
tation. Over the years, we have elevated quality competitiveness through benchmarking
excellent products, and accomplished costs reduction and production flexibility by
strengthening production stability and efficiency. We also made efforts to diversify sales
Bathtub made of PIA points, by making person to person contact and building trust relationships in a way that
dispatched our people to global markets to regularly visit overseas customers and fac-
tored into their feedbacks while making improvement. We aim to focus on securing com-
petitiveness in world markets, by setting up concrete goals of becoming a global leader,
enhancing capabilities of employees and laying out market-oriented strategies.
*PIA (Purified Isophthalic Acid): ‌Raw material that is used for paint and plastic products, including PET and construction
of interior and exterior materials.
Maintenance Service for Customers

Lotte Chemical works hard to understand difficulties of customers and proposes ideas that can address them, before providing specific
solutions. The company presents customers with maintenance service, technology support and management experience, and equipment
inspection and replacement. We were able to increase their satisfaction level, by helping them to strengthen self-maintenance capabilities.
Details of Supports
• Facility inspection and diagnosis

• Consumables for repair and maintenance
• Transfer of knowhow regarding facility inspection
* ‌We plan to implement year-round technical support from this year.
Maintenance Service for custromers
73
Issues 06
Social Contribution
An increasing number of companies are recognizing the need for social
contribution and acting on it, slowly getting out of past perceptions of
management that put the greatest value on profit generation. Instead
of one-time and one-way social contributions, long-term practical sup-
port based on strategic perspectives to beneficiaries and mutual devel-
opment between companies and recipients draw attention. In this re-
port, Lotte Chemical introduces its strategic social contribution
activities on the foundation of its social contribution system and the
future direction of mutual social contribution.
Our Response
Engagement in Realization of CSR activity roadmap Establishing existing activities and 1. Expanded
‌ strategic social contribution
the development expanding strategic activities activities specific to each worksite
of local 2. Implemented
‌ company-wide social
●
communities contribution activities
3. Launched
‌ an integrated social contribution
brand -“Charlotte Service Corps”
A program to improve the living Searching for demands of worthy Offered painting, papering, floor replacement,
environment of needy people recipents in Yeosu, Daesan, and and electric device and drainpipe repair ●
Ulsan and onducting the program services to more than 20 needy families
Green sharing activity Holding an event to provide trees to 1. Delivered approximately 5,000 trees
residents and public offices in Yeosu 2. Donated
approximately 1,700 trees to
●
Yeocheon-dong Community Service Center
and Yeosu Expo Complex
Plans for 2016

Engagement in the Employees’ engagement Encouraging employees to engage in Development of new programs and
- 2016
development of local sharing activities setting up a talent donation pool
communities A program to improve the living Seeking demands of recipients in Yeosu, Implementation
environment of needy people Daesan, and Ulsan and conducting - 2016
the program
Green sharing activity Developing green sharing programs for all Implementation
- 2016
worksites
74
Engagement in the Development of Returning part

We fulfill our corporate social
Local Communities
of the profits
responsibility
to society
Lotte Chemical recognizes corporate social responsibility and Voluntary We feel rewarded conducting social
participation contribution activities
will serve its role as a corporate citizen, fulfilling its accountabili-
ty. Under its CSR vision “a Global company fulfilling its social re
We implement sharing activities that
-sponsibility”, we will grow as a partner to local communities, Integrity,
receive appreciation and trust from the
service, and
performing strategically socially responsible activities. community, on the basis of Lotte
passion
Group’s management philosophy
Social Contribution System

Based on its core value that puts value on people and puts the
CSR Activity Roadmap
investment in them ahead of anything else, we are systemically
conducting domestic and overseas social contribution activi- 2016
ties. 2013
2008
Slogan
Establishment of
Warmth & Dream to the Heart Increasing CSR existing activities
Consensus on the activities such as and expansion of
“To the people with a warm heart, necessity of CSR and sisterhood strategic activities
introduction relationship
to the future with passion”
• ‌Setting up a talent
• ‌Establishment of the • ‌Setting up sisterhood donation pool
matching-grant system relationships with • ‌Implementation of
major organizations
Charlotte Volunteer Corps talent donation
In May 2015, we unified different names of diverse volunteer activities (learning, job
mentoring, etc.)
service groups into the Charlotte Volunteer Corps, on the occa- • ‌Establishment of mid to
sion of the announcement of a creative labor-management cul- long-term strategies
ture of Lotte Group. This event was an opportunity that laid the (development of
specialized activities)
foundation for well-arranged volunteer services.
75
Strategic Social Contribution Activities Residential Environment Improvement for Under-

privileged Families: Yeosu, Daesan and Ulsan plant
We are conducting company-wide activities, based on mid and The company is acting on residential environment improve-
long-term social contribution strategies, and are also development programs for underprivileged families in Yeosu, Daesan
ing and executing other actions specialized to each domestic and Ulsan, home to its three plants. Public Affair Team in
and overseas worksites. We will keep communicating with local charge of machinery maintenance at each plant began the pro-
communities as a corporate citizen. gram in 2009, and those working at the department provide
services for the marginalized, including fixing broken electricity
Lotte Chemical’s Social Contribution Activities facilities and kitchen piping.
Lotte Chemical is working on company-wide social activities,
grouping them into four areas - social welfare, charity event,
Target • ‌Needy people, senior citizens living alone, and the
collaboration, improving the living environment. marginalized in Yeosu, Daesan and Ulsan
Details • ‌Improvement of living environment through prior
inspections on inconveniences of residents
• Elimination of risk factors that can endanger residents
• ‌Painting of external walls, papering interior spaces, and
replacement of linoleum
Setting up sisterhood
Sisterhood Perfor- • Improvement of the quality of life
relationships with
relationship mance • ‌Enhancement of our corporate image and close fellowship
social welfare facilities
with social with the local communities
around our sites and
welfare • ‌Improving the self confidence of employees through talent
Social welfare regular sponsorships
facilities donation
Support for
Support multicultural families,
underprivi- elderly people living
leged alone, and adolescents
Charity event from North Korea
Joint social Joint sharing

contribution activities with
with relevant environmental
organizations organization and local
Collaboration community centers
Talent donation for

Repair of
repairing shabby
Improving shabby
houses around our
houses
the living sites
environment Improvement of the living environment of needy people
76
Social Contribution Activities Specific to with sisterhood ties, including Korea Children’s Foundation and
Each Worksite community center for those with disabilities.
The headquarters, the research institute, and each worksite
practice social contribution activities regularly as a way to devel- Yeosu Plant
op mutual exchange with local communities. Employees and Volunteer corps of Yeosu Plant provide not only regular
their family members carry out region-wise volunteer services home-fixing services, but also necessities and distribution of
that include social welfare, support to the underprivileged, and meals at kitchen soups for the marginalized in the region. In
cooperation with external groups and residents. They also par- addition, they work to improve the nearby environment
ticipate in solving social issues in their town, through activities through tree-sharing event and also give scholarships to wellp-
pertaining to those issues. Lotte Chemical is dedicated to be- erforming students as a way to nurture local talents.
coming a partner for co-prosperity and cooperation, running so-
cial contribution programs with integrity and continuity. Regular Tree Sharing and Donation︱Since 2014, the plant has
held tree-sharing events with those living in the neighborhood
Headquarters and working at public offices. In 2015, some 5,000 trees, such as
Lotte Chemical headquarters has organized a volunteer service osmanthus fragrans var. aurantiacus, osmantus asiaticus and
corps to provide social contribution activities on a regular ba- rhododendron schlippenbachii, were handed out to them. Lotte
sis. In addition, the organization lends financial support to en- Chemical also donated trees for planting near Yeocheon-dong
able the needy in the neighborhood- including kids, teenagers, Community Service Center and Yeosu Expo area, as a way to par-
those with various ethnicities and the handicapped- continue ticipate in efforts of making the local environment green.
their living and education. The company also practices a bri-
quette sharing event and blood donation, keeping the value of
Target • ‌Local residents and public offices in Yeosu
sharing in mind. Details • ‌Event for sharing trees with residents
Providing trees cultivated in company houses to residents
for free
• ‌Donation of trees to public offices
Donated about 1,700 trees to public offices and Yeosu Expo
Complex and plan to continue this activity
Perfor- • ‌Contribution to creating green environment by donating
mance trees and flowers for free
• Enhancement of eco-friendly corporate image
Book donation at the Head Office
Volunteer service corps at Yeosu plant
Volunteer Service to Local Cultural and Art Festival Event︱

The volunteer group provided volunteer services to a local cul-
Career path mentoring for Seongnam high school
tural and art festival, which was attended by approximately
2,000 kids and adults. The volunteers secured safety and order
Briquette Sharing Event︱The briquette sharing event that during the event of local child centers and kept the area clean
started in 2012 provided its fourth round of volunteer service in after the event, keeping in mind the meaning of social contri-
November 2015. More than 100 employees working at the bution activities.
headquarters went to Samsung-dong, Gwanak-gu, Seoul to carry
over 6,000 briquettes to 30 underprivileged households. With this Red Food Truck Event︱On every Friday of the third week of a
event, they formed camaraderie and trust among themselves month, Lotte Chemical offers Red Food Truck free meal to sen-
with heart warming feelings. iors in cooperation with Yeosu Senior Welfare Center. In addi-
tion, the company conducts diverse volunteer activities for the
Matching Grant︱Since 2008, Lotte Chemical has run a match- marginalized in the region, such as provision of daily necessi-
ing grant by which the company donates the same amount of ties and donation of talents to local children’s centers or or-
the funds voluntarily raised by employees all year round. The phanages.
fund set up by this program is used for social contribution ac-
tivities at each worksite, and regular donations to institutes
77
Daesan Plant Ulsan Plant

Daesan Plant categorized volunteer services into four different Ulsan Plant divided volunteer services into three sub-groups i.e.
sub-groups (residential environment, support to the underpriv- support to the underprivileged, facility maintenance and resi-
ileged, social welfare and cooperation with outside parties) to dential environment improvement. The division for the margin-
deliver more systematic and practical support. The plant also alized selects 60 households, visits these homes, and provides
awards scholarship to students from underprivileged house- daily necessities every two months. The upkeep team goes out
holds, donates necessities to children’s centers and institutes to senior care hospitals and welfare centers every month to fix
for the disabled, offers volunteer services at welfare centers out-of-order electricity systems, replace facilities with new ones,
and supplies heating oil to marginalized families. and becomes a friend to the inmates with whom they carry out
easy and comfortable conversations. The unit of residential envi-
ronment improvement works in collaboration with local volun-
Details • ‌Enhancement of the living environment
teer communities to upgrade housing conditions of those in
Repairing houses for the needy
• Charity
‌ events need in rural areas.
Delivery of side dishes and daily necessities,
being companion, etc.
• ‌Social welfare Details • House repair
Sponsorship of goods and services to local welfare facilities • Volunteer services at welfare facilities
• ‌Collaborative activities • Charity events
Making and sharing Kimchi, scholarship program, • Educational donation
sponsorship to voluntary service groups • Talent donation
Perfor- • ‌Conducted more efficient and methodical social • Santa Expedition together with Ulsan City
mance contribution activities by integrating individual program of • ‌Scholarships and mentoring services to students with high
each team grades belonging to low income families
Perfor- • ‌Inspiring self-confidence of employees and family bonds
mance through monthly volunteer services by employees and their
families
• ‌Winning awards (members of the corps and “Dasom
Volunteer Service Corps”)
Volunteer service corps at Daesan plant
Volunteer service corps at Ulsan plant
Let’s be Santa 2015︱Volunteer service groups in Ulsan Plant

launched “Let’s be Santa 2015” event, together with Ulsan re-
gional headquarters of ChildFund Korea. The program distribut-
ed Christmas cards and presents to children from 40 low-income
Volunteer assistance for residents in Daesan
families, in the hope that they have a brighter future.
Joint Charity Bazaar ︱Lotte Chemical and the association of

women residing at Daesan Plant’s housing facility held a joint
charity bazaar. More than 1,000 employees and their family
members participated in this event of food, clothes and other
items, and the total amount of the money raised was donated
for underprivileged people in the region. This charity fair shows
the plant’s will to prosper with its communities.
Making and Sharing Kimchi︱Over 150 employees of Daesan

Plant, members of the women’s association whose spouse works Let’s be Santa
at the plant, and in-house volunteer groups made Kimchi of
2,000 cabbages and handed them out to the needy neighbor-
hood, including households with multicultural background and
seniors living alone.
78
New Volunteer Activities︱Employees of Lotte Chemical visited Research Institute

study rooms of preliminary school students in Ulju-gun once a Hope Sharing Scholarship︱Lotte Chemical Research Institute
month and began educational donation. In addition, they select- holds “Hope Sharing Scholarship Ceremony” twice a year, one in
ed students of low-income families through recommendations the first and the other in the second half of a year. Capitalizing on
of employees and provided reimbursement for school expenses the fund raised by over 350 employees of the institute, the schol-
and practical mentoring to them. Volunteers hope to build a arship continuously awards the students who are chosen
long-term relationship with them not only through advice on ac- through the recommendation of local governments, until they
ademic achievements and relationships with friends but also graduate from high school.
through outdoor activities, such as going to baseball games of
Lotte Giants. In addition, they help North Korean defectors in the Visit to Nursing Home for Seniors ︱Research staff, mostly new
region to make soft-landing in local communities, by paying for entry-level employees of the institute, visited “Love House”, a
the medical check-up needed for their employment, and arrang- nursing home for seniors and provided cleaning services, both
ing memorial services on traditional Korean holidays. They also within and outside of the facility, assisted seniors in their walks,
created an agreement of corporate social contribution with Ul- distributed meals, and assisted the elderly during their meals. In
san Metropolitan City through which they conducted projects, particular, around the time of traditional Korean holidays, they
including “Happiness Home Sweet Home” and “Hand On Pro- donated fruits and meats to the place, revisiting the meanings of
gram” as a representative CSR company in the region. News re- heart-felt relationship with the neighborhood and the sharing of
ports about these activities appeared on local broadcasts and happiness.
newspaper companies, creating a feeling of bond with local
communities and a dramatic improvement on the perception of
the company.
Hope sharing scholarship Nursing home “Love House”
79
Global Social Contribution Activities time at Lotus Desaru Beach Resort. This event helped them to
build stronger family bonds and provided a sense of being in-
Lotte Chemical has been actively making locally specialized social volved in us.
contributions, at its overseas worksites. We will go forward, fulfilling
social responsibilities as a global chemical company. LC Pakistan
Environment
Green Day︱The company set up Green Day to create biodiversity
Vision for Social Contribution and an ecological system in its region. All of its employees planted
trees in the surrounding areas to create a more refreshing area on
“Grow with the Society” a regular basis. With the aim of sharing the need for environmen-
tal conservation, Lotte Chemical held a drawing contest under
the theme of the conservation for their family members.
Warmth Human Dream Earth Day︱In April 2015, employees carried out cleaning activities
near the Russian Beach, Port Qasim. They collected approximately
A global company fulfilling its 141 kilogram of garbage, and improved the condition of the area.
social responsibility
1. Fulfilling
‌ corporate social responsibility
(returning profits to society)
2. Implementing
‌ voluntary engagement
(volunteer service in the community)
3. Integrity,
‌ service, and passions
(social contribution based on Lotte Group’s management philosophy)
Earth day
LC Titan in Malaysia
Support to Local Communities Health
LC Titan in Malaysia has provided food and other donations to Medical services are mostly out of reach for poor Pakistanis,
the marginalized. The company also continues support for and this is why the company has begun offering such service to
those who were affected by floods and typhoons to help them the marginalized in its region through “Patient Welfare Pro-
lead a normal life. In addition, people working at the site regu- gramme”. Regardless of religion, gender and race, everyone
larly participate in blood donation camps thereby, lending a big who is in need of health treatment can have the benefit through
hand to areas with short blood supply. In 2015, nine underprivi- Aga Khan University hospital. In addition, it provides support of
leged households received aids, and 101 employees participat- free dialysis to those patients whose cancer cell spread to other
ed in blood donation. These are the actions that make the organs, including kidney and liver, through large-name medical
needy feel that they are wanted and cared for. centers in South Asia. It also runs a fund, raised only on a dona-
tion basis, to help medical schools and research institutes, thus
Educational Support elevating the service quality of in the region.
We picked up 115 preliminary and junior high school students
from 16 schools and gave them prizes, in the hope that they be- Education
come an incentive for better performance. In addition, it chose The company gives an amount of scholarship that fully covers
11 students from two universities to award them with Lotte tuition of outstanding students majoring in engineering and
scholarship. The annual amount of USD 3,800 per person will technology at LUMS and NED University. It has also published
help them to focus on their studies alone, relieved from the Korea-Pakistan Business & Friendship Council Magazine to form
burden of tuition expenses. In 2015, it entered Sains Malaysia an atmosphere of understanding mutual cultures, and to build
University in the scholarship program. Lotte Chemical is also a friendlier relationship between the two countries.
making efforts to build educational infrastructure, including
support for school construction. LC Gaheung in China
The company is actively taking part in the activity of the city
Support for Local Employees government that builds a society with harmony by eliminating
LC Titan helps its employees develop themselves through in- the gap between the rich and the poor. In 2015, it donated ap-
ternship programs, capability development investment and proximately KRW 10 million to a charity bazaar held in the city,
support. In 2015, it held Family Day 2015 through which more and awards USD 1,000 of annual scholarship to 10 students of
than 2,000 employees and their family members enjoyed their Gaheung University through the Lotte Foundation.
80
Appendix
82 GRI G4 Index
86 Lotte Chemical’s Declaration of

Human Rights
87 Accolades and Membership of
Association
88 Independent Assurance Report
90 Consolidated Financial Statements
92 Production Capacity of Main Products
93 Sustainability Data
81
GRI G4 Index
General Standard Disclosure

● Fully Reported ◐ Partially Reported ◦ Not Reported
Indicators Contents Reporting Page Remarks

Strategy and Analysis
Provide a statement from the most senior decision-maker of the organization
G4-1 (such as CEO, chair, or equivalent senior position) about the relevance of sustainability ● 4~5
to the organization and the organization’s strategy for addressing sustainability
G4-2 Key impacts, risks, and opportunities ● 4~5, 34~35
Organizational Profile
G4-3 Name of the organization ● 6
G4-4 Primary brands, products, and services ● 10~13
G4-5 Location of the organization’s headquarters ● 6
G4-6 Number of countries where the organization operates, and names of countries
where either the organization has significant operations or that are specifically relevant ● 6~7
to the sustainability topics covered in the report
G4-7 Nature of ownership and legal form ● 31
G4-8 Markets served
● 6~7
(including geographic breakdown, sectors served, and types of customers and beneficiaries)
G4-9 Scale of the organization ● 6~7, 90~92
G4-10 Scale of the workforce ● 93
G4-11 Percentage of total employees covered by collective bargaining agreements ● 93
G4-12 Describe the organization’s supply chain ● 67~69
G4-13 Significant changes during the reporting period regarding the organization’s size, structure,
● About this Report
ownership, or its supply chain
G4-14 Report whether and how the precautionary approach or principle is addressed by the organization ● 34~35
G4-15 List externally developed economic, environmental and social charters, principles,
● 33, 86
or other initiatives to which the organization subscribes or which it endorses
G4-16 Memberships in associations (such as industry associations) and·or national·
● 87
international advocacy organizations in which the organization
Identified Material Aspects and Boundaries
G4-17 Operational structure of the organization, including main divisions, operating companies,
● 6~7
subsidiaries, and joint ventures (List all entities in the consolidated financial statements)
G4-18 Process for defining report content and the Aspect Boundaries and
● 40~41
explain how the Reporting Principles has been implemented
G4-19 List all the material Aspects identified in the process for defining report content ● 40~41
G4-20 For each material Aspect, report Aspect Boundary within the organization ● About this Report
G4-21 For each material Aspect, report the Aspect Boundary outside the organization ● About this Report
G4-22 Explanation the effect of any restatements of information provided
● 20, 22~23 N/A
in previous reports, and the reasons for such restatements
G4-23 Report significant changes from previous reporting periods in the Scope and Aspect Boundaries ● 20, 22~23 N/A
Stakeholder Engagement
G4-24 The list of stakeholder groups engaged by the organization ● 38
G4-25 The basis for identification and selection of stakeholders with whom to engage ● 38
G4-26 Approaches to stakeholder engagement, including frequency of engagement by type and by
● 40
stakeholder group
G4-27 Key topics and concerns that have been raised through stakeholder engagement,
and how the organization has responded to those key topics and concerns, including through its ● 41
reporting; Report the stakeholder groups that raised each of the key topics and concerns
Report Profile
G4-28 Reporting period (such as fiscal or calendar year) for information provided ● About this Report
G4-29 Date of most recent previous report (if any) ● About this Report
G4-30 Reporting cycle (such as annual, biennial) ● About this Report
G4-31 Provide the contact point for questions regarding the report or its contents ● About this Report
G4-32 Table identifying the location of the Standard Disclosures in the report ● About this Report
G4-33 Policy and current practice with regard to seeking external assurance for the report ● 88~89
Governance
G4-34 The governance structure of the organization, including committees of
the highest governance body. Identify any committees responsible for ● 30~31
decision-making on economic, environmental and social impacts
Ethics and Integrity
G4-56 Describe the organization’s values, principles, standards and norms of
● 36~37
behavior such as codes of conduct and codes of ethics
82
Appendix GRI G4 Index Lotte Chemical’s Accolades and Independent Consolidated Production Sustainability
Declaration of Membership of Assurance Report Financial Capacity of Data
Human Rights Association Statements Main Products
Specific Standard Disclosure
Economic ● Fully Reported ◐ Partially Reported ◦ Not Reported

Economic Performance
DMA(Disclosures on Management Approach) ◐ 20~23
G4-EC1 Direct economic value generated and distributed ● 90~91
G4-EC2 Financial implications and other risks and opportunities for
● 46~47
the organization’s activities due to climate change
G4-EC4 Financial assistance received from government ● 93
Indirect Economic Impacts
DMA(Disclosures on Management Approach) ● 74
G4-EC7 Development and impact of infrastructure investments and services supported ● 74~80
G4-EC8 Significant indirect economic impacts, including the extent of impacts ● 74~80
Environment
Materials
G4-EN1 Materials used by weight or volume ● 48
G4-EN2 Percentage of materials used that are recycled input materials ● 48
Energy
G4-EN3 Energy consumption within the organization ● 48
G4-EN4 Energy consumption outside of the organization ● 48
G4-EN5 Energy intensity ● 48
G4-EN6 Reduction of energy consumption ● 47
G4-EN7 Reductions in energy requirements of products and services ● 26, 47
Water
G4-EN8 Total water withdrawal by source ◐ 48
G4-EN9 Water sources significantly affected by withdrawal of water ● 48
G4-EN10 Percentage and total volume of water recycled and reused ● 48
Emissions
G4-EN15 Direct greenhouse gas (ghg) emissions (scope 1) ● 47
G4-EN16 Energy indirect greenhouse gas (ghg) emissions (scope 2) ● 47
G4-EN17 Other indirect greenhouse gas (ghg) emissions (scope 3) ◐ 47
G4-EN18 Greenhouse gas (GHG) emissions intensity ◐ 47
G4-EN19 Reduction of greenhouse gas (ghg) emissions ● 47
G4-EN20 Emissions of ozone-depleting substances (ods) ● 49
G4-EN21 NOx, SOx, and other significant air emissions ● 49
Effluents and Waste
G4-EN22 Total water discharge by quality and destination ◐ 48
G4-EN23 Total weight of waste by type and disposal method ● 50
G4-EN24 Total number and volume of significant spills ● 49
83
GRI G4 Index
Environment ● Fully Reported ◐ Partially Reported ◦ Not Reported

Products and Services
G4-EN27 Extent of impact mitigation of environmental impacts of products and services ● 47, 51
Compliance
G4-EN29 Monetary value of significant fines and total number of nonmonetary sanctions
● 45
for non-compliance with environmental laws and regulations
Overall
G4-EN31 Total environmental protection expenditures and investments by type ● 49
Society
Employment
G4-LA1 Total number and rates of new employee hires and employee turnover
● 58, 93
by age group, gender and region
G4-LA2 Benefits provided to full-time employees that are not provided
● 62~65
to temporary or part-time employees, by significant locations of operation
G4-LA3 Return to work and retention rates after parental leave, by gender ● 93
Occupational Health and Safety
G4-LA5 Percentage of total workforce represented in formal joint management–worker health and
● 93
safety committees that help monitor and advise on occupational health and safety programs
G4-LA8 Health and safety topics covered in formal agreements with trade unions ● 53
Training and Education
G4-LA9 Average hours of training per year per employee by gender, and by employee category ● 59
G4-LA10 Programs for skills management and lifelong learning that support the continued employability
● 58~59
of employees and assist them in managing career endings
G4-LA11 Percentage of employees receiving regular performance and career development reviews,
● 60
by gender and by employee category
Diversity and Equal Opportunity
G4-LA12 Composition of governance bodies and breakdown of employees per employee category
● 58
according to gender, age group, minority group membership, and other indicators of diversity
Equal Remuneration for Women and Men
G4-LA13 Ratio of basic salary and remuneration of women to men by employee category,
59
by significant locations of operation
84
Human Rights ● Fully Reported ◐ Partially Reported ◦ Not Reported

Investment
G4-HR1 Total number and percentage of significant investment agreements and contracts that
◐ -
include human rights clauses or that underwent human rights screening
G4-HR2 Total number of employee training on human rights policies or procedures concerning aspects ● 61
of human rights that are relevant to operations, including the percentage of employees trained
Child Labor
G4-HR5 Operations and suppliers identified as having significant risk for incidents of child labor,
● 61
and measures taken to contribute to the effective abolition of child labor
Forced or Compulsory Labor
G4-HR6 Operations and suppliers identified as having significant risk for incidents or forced or compulsory
● 61
labor, and measures to contribute to the elimination of all forms of forced or compulsory labor
Society
Local Communities
G4-SO1 Percentage of operations with implemented local community engagement,
● 76~80
impact assessments, and development programs
G4-SO2 Operations with significant actual or potential negative impacts on local communities ● 54
Anti-Corruption
G4-SO3 Total number and percentage of operations assessed for risks related to corruption and Company-wide
● 85
the significant risks identified evaluation
G4-SO4 Communication and training on anti-corruption policies and procedures ● 37, 67
G4-SO5 Confirmed incidents of corruption and actions taken ● 37
Product Responsibility
Customer Health and Safety
G4-PR1 Percentage of significant product and service categories for which health and safety impacts are
◐ 73
assessed for improvement
Total number of incidents of non-compliance with regulations and voluntary codes concerning
G4-PR2 the health and safety impacts of products and services during their life cycle, by type of ● 85 No violation
outcomes
Product and Service Labeling
G4-PR3 Type of product and service information required by the organization’s procedures for
product and service information and labeling, and percentage of significant product and ◐ 73
service categories subject to such information requirements
G4-PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning
● 85 No violation
product and service information and labeling, by type of outcomes
G4-PR5 Results of surveys measuring customer satisfaction ● 72
Customer Privacy
G4-PR8 Total number of substantiated complaints regarding breaches of customer No miss or
privacy and losses of customer data ● 85 complaints regarding
customer privacy
85
Lotte Chemical’s Declaration of Human Rights
As an advanced company that is looking forward to a prosperous future, led by trust and love to the na-
ture, Lotte Chemical duly respects human rights of all of its stakeholders, including customers, its mem-
bers, local communities and partners.
Lotte Chemical hereby declares that it will support international standards with regard to human rights,
including the United Nations Universal Declaration of Human Rights and UN Guiding Principles on Busi-
ness and Human Right (Ruggie Framework) endorsed by the UN Human Rights Council, and fulfill its re-
sponsibilities in relation to it. In addition, Lotte Chemical will make utmost efforts for its subsidiaries and
partners to abide by the declaration hereof.
Lotte Chemical hereby announces publicly that it will do its best to prevent any possible human rights in-
fringement from occurring in the course of management, and respect and protect human rights and the
free will of all of its stakeholders. Lotte Chemical will fully carry out its responsibility as a responsible cor-
porate citizen and will put in maximum efforts to stabilize and disseminate human rights management.
Thank you.
May. 2016
President & CEO, Lotte Chemical Corp. Huh Soo-young
86
Accolades and Membership of Association
Accolades in 2015
Award Date
Top 100 excellent companies in job creation hosted by the Ministry of Employment & Labor Mar. 25, 2015
“A” rating at the integrated evaluation of excellent companies in ESG hosted by the Corporate Governance Service Oct. 13. 2015
Certified for the DJSI Asia Pacific for five consecutive years Oct. 16. 2015
Membership of Association
Federation of Korean Industries Korea International Trade Association Korea Chemical Industry Council
Korea Business Council for Sustainable Seoul Chamber of Commerce & Industry
Economic Organization Council
Development Association
Korea Institute of Chemical Engineers EPCA (European Petrochemical Association) Korea Employers Federation
Korea Union of Chemical Science and

Korea Management Association Korea Economic Research Institute
Technology Societies
Korea Industrial Technology Association Korea Polymer Society of Korea Korea Fair Competition Federation
Korea Personnel Improvement Association Korea Petrochemical Industry Association Korea Listed Companies Association
The National Academy of Korea Specialty Chemical Industry

Korea-Japan Economic Association
Engineering of Korea Association
Korea Productivity Center ASIA BUSINESS COUNCIL The Membrane Society of Korea
87
Independent Assurance Report
To the Readers of Lotte Chemical 2015 Sustainability Report:

Foreword
Korea Management Association Registration Inc. (hereinafter “KMAR”) has been requested by of Lotte Chemical to verify the con-
tents of its 2015 Sustainability Report (hereinafter “the Report”). Lotte Chemical is responsible for the collection and presentation
of information included in the Report. KMAR’s responsibility is to carry out assurance engagement on specific data and informa-
tion in the assurance scope stipulated below.
Scope and Standard

Lotte Chemical describes its efforts and achievements of the corporate social responsibility activities in the Report. KMAR per-
formed a Type 2, moderate level of assurance using AA1000AS (2008) as an assurance standard. KMAR’s assurance team(hereinaf-
ter “the team”) evaluated the adherence to Principles of Inclusivity, Materiality and Responsiveness, and the reliability of the se-
lected GRI G4 indices as below, where professional judgment of the team was exercised as materiality criteria.
• G4 Reporting Principles
• General Standard Disclosures
• Specific Standard Disclosures
- Generic DMA of each of following material Indicators of Aspects
- Economic Performance: EC1, EC2, EC4 - Occupational Health and Safety: LA5, LA8
- Indirect Economic Impacts: EC7, EC8 - Training and Education: LA9, LA10, LA11
- Materials: EN1, EN2 - Equal
‌ Remuneration for Women and Men: LA13
- Energy: EN3, EN4, EN5, EN6, EN7 - Investment: HR1, HR2
- Water: EN8, EN9, EN10 - Child Labor: HR5
- Emissions: EN15, EN16, EN17, EN18, EN19, EN20, EN21 - Forced or Compulsory Labor: HR6
- ‌Effluents and Waste: EN22, EN23, EN24, EN25, EN26 - Anti-corruption: SO3, SO4, SO5
- Products and Services: EN27, EN28 - Customer Health and Safety: PR1, PR2
- Compliance: EN29 - Product
‌ and Service Labeling: PR3, PR4, PR5
- Overall: EN31 - Customer Privacy: PR8
- Employment: LA1, LA2, LA3
This Report excludes a data and information of joint corporate, contractor etc. which is outside of the organization, i.e. Lotte
Chemical, among report boundaries.
Our Approach
In order to verify the contents of the Report within an agreed scope of assurance in accordance with the assurance standard, the
team has carried out an assurance engagement as follows:
• Reviewed overall report

• Reviewed materiality test process and methodology
• Reviewed sustainability management strategies and targets
88
Our Conclusion
Based on the results we have obtained from material reviews and interviews, we had several discussions with Lotte Chemical on
the revision of the Report. We reviewed the Report’s final version in order to confirm that our recommendations for improvement
and our revisions have been reflected. When reviewing the results of the assurance, the assurance team could not find any inap-
propriate contents in the Report to the compliance with the principles stipulated below. Nothing has come to our attention that
causes us to believe that the data included in the verification scope are not presented appropriately.
Inclusivity
Inclusivity is the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability.
• ‌Lotte Chemical is developing and maintaining stakeholder communication channels in various forms and levels in order to
make a commitment to be responsible for the stakeholders. The assurance team could not find any critical stakeholder Lotte
Chemical left out during this procedure.
Materiality
Materiality is determining the relevance and significance of an issue to an organization and its stakeholders. A material issue is an
issue that will influence the decisions, actions, and performance of an organization or its stakeholders.
• ‌Lotte Chemical is determining the materiality of issues found out through stakeholder communication channels through its
own materiality evaluation process, and the assurance team could not find any critical issues left out in this process.
Responsiveness
Responsiveness is an organization’s response to stakeholder issues that affect its sustainability performance and is realized
through decisions, actions, and performance, as well as communication with stakeholders.
• ‌The assurance team could not find any evidence that Lotte Chemical’s counter measures to critical stakeholder issues were
inappropriately recorded in the Report.
We could not find any evidence the Report was not prepared in accordance with the ‘Core Option’ of GRI G4.
Recommendation for Improvement

We hope the Report is actively used as a communication tool for stakeholders and recommendation for improvements. And we
recommend Lotte Chemical, for continuous improvements, that;
• ‌Develop a measure to quantitatively manage and objectively represent the sustainability management performance that lead
to GRI reporting indicators, to increase stakeholder’s trust in Lotte Chemical.
• ‌Make endeavor to develop performance management system and connect it with the evaluation system, to find the
sustainability performance and data through more systematic way.
Our Independence
With the exception of providing third party assurance services, KMAR is not involved in any other Lotte Chemical’ business opera-
tions that are aimed at making profit in order to avoid any conflicts of interest and to maintain independence.
May, 23rd, 2016

CEO Ki Ho Park
89
Consolidated Financial Statements
Consolidated Financial Position

Item Unit 2013 2014 2015
Assets
I. Current assets Korean Won 4,614,354,225,960 4,321,552,617,111 5,405,499,989,622
1. Cash and cash equivalents Korean Won 979,089,879,334 949,302,735,384 1,942,218,655,868
2. Short-term financial instruments Korean Won 311,516,213,804 313,606,363,436 841,697,947,914
3. Available-for-sale financial assets Korean Won 312,590,000 20,348,875,000 45,639,020,000
4. Trade and other receivables Korean Won 1,595,061,185,532 1,268,432,981,044 1,016,335,868,734
5. Inventories Korean Won 1,628,759,888,662 1,528,109,897,449 1,162,746,555,678
6. Financial lease receivables Korean Won 138,598,084 222,114,588 138,598,084
7. Current income tax assets Korean Won 31,238,001,747 22,334,476,557 18,567,576,319
8. Other current financial assets Korean Won 6,877,836,580 14,566,144,494 16,740,348,522
9. Other current non-financial assets Korean Won 61,360,032,217 204,629,029,159 361,415,418,503
II. Non-current assets Korean Won 6,073,309,345,040 6,001,103,002,178 6,062,308,909,152
1. Long-term financial instruments Korean Won 50,513,500,000 50,512,000,000 67,509,500,000
2. Available-for-sale financial assets Korean Won 105,097,809,642 167,436,011,673 193,646,663,061
3. Financial lease receivables Korean Won 3,389,012,815 3,181,118,858 3,139,735,572
4. Investments in associates Korean Won 1,051,906,522,764 738,665,448,363 846,144,172,015
5. Investments in joint ventures and associates Korean Won 400,170,679,159 783,561,064,648 800,374,671,919
6. Tangible assets Korean Won 4,186,519,030,580 3,975,810,386,927 3,964,852,431,989
7. Investments in real estate Korean Won 85,441,372,373 84,247,016,415 81,298,743,603
8. Goodwill Korean Won 3,196,151,567 3,196,151,567 3,196,151,567
9. Intangible assets Korean Won 20,592,373,765 20,362,884,418 34,442,559,894
10. Other non-current financial assets Korean Won 7,343,568,175 9,071,325,009 8,277,637,186
11. Other non-current non-financial assets Korean Won 9,630,509,274 7,670,050,071 4,655,761,108
12. Deferred income tax assets Korean Won 149,508,814,926 157,389,544,229 54,770,881,238
Total assets Korean Won 10,687,663,571,000 10,322,655,619,289 11,467,808,898,774
Liabilities
I. Current liabilities Korean Won 2,929,005,557,339 2,057,809,967,357 2,146,107,848,882
1. Trade and other payables Korean Won 1,439,008,571,487 724,825,882,322 934,257,282,162
2. Fair value financial liabilities Korean Won 9,137,448,320 8,773,074,559 179,284,262
3. Short-term borrowings Korean Won 1,308,825,834,232 1,092,991,431,061 911,337,908,046
4. Current income tax liabilities Korean Won 58,147,641,280 48,498,991,290 157,692,458,677
5. Other current financial liabilities Korean Won 30,403,051,396 77,642,098,427 57,933,582,156
6. Other current non-financial liabilities Korean Won 62,130,992,798 101,698,203,745 75,530,844,307
7. Current provisions Korean Won 21,352,017,826 3,380,285,953 9,176,489,272
II. Non-current liabilities Korean Won 1,464,199,290,492 1,795,846,882,669 1,766,114,975,036
1. Long-term borrowings Korean Won 1,166,967,360,889 1,510,857,226,709 1,500,781,746,218
2. Retirement benefit liabilities Korean Won 19,434,578,786 26,207,544,854 30,263,275,849
3. Deferred income tax liabilities Korean Won 185,848,010,576 220,408,408,379 204,218,459,079
4. Other non-current financial liabilities Korean Won 87,940,318,227 26,064,100,154 17,651,966,771
5. Other non-current non-financial liabilities Korean Won 4,009,022,014 4,365,665,480 3,398,126,882
6. Non-current provisions Korean Won 7,943,937,093 9,801,400,237
Total liabilities Korean Won 4,393,204,847,831 3,853,656,850,026 3,912,222,823,918
Equity
I. Equity attributable to the owner of the parent Korean Won 6,256,119,973,079 6,437,098,705,381 7,524,751,244,619
1. Share capital Korean Won 171,377,095,000 171,377,095,000 171,377,095,000
2. Other share capital Korean Won 477,284,160,127 476,522,242,395 476,522,242,395
3. Retained earnings Korean Won 5,682,230,930,647 5,790,777,027,820 6,739,344,145,893
4. Other reserves Korean Won (74,772,212,695) (1,577,659,834) 137,507,761,331
II. Non-controlling interests Korean Won 38,338,750,090 31,900,063,882 30,834,830,237
Total equity Korean Won 6,294,458,723,169 6,468,998,769,263 7,555,586,074,856
Total liabilities and equity Korean Won 10,687,663,571,000 10,322,655,619,289 11,467,808,898,774
90
Consolidated Statements of Comprehensive Income

Item Unit 2013 2014 2015
I. Sales Korean Won 16,438,935,362,784 14,858,969,270,208 11,713,338,201,119
II. Cost of sales Korean Won 15,527,174,061,634 14,058,561,842,108 9,646,291,210,590
III. Gross profit Korean Won 911,761,301,150 800,407,428,100 2,067,046,990,529
Selling and administrative expenses Korean Won 424,338,582,195 449,478,910,448 455,927,525,047
Ⅳ. Operating income (loss) Korean Won 487,422,718,955 350,928,517,652 1,611,119,465,482
Financial income Korean Won 111,567,410,134 129,490,442,812 145,410,485,658
Financial cost Korean Won 169,637,458,738 187,535,208,115 204,624,157,754
Gain (loss) from investments in associates and joint ventures Korean Won (27,410,007,722) 1,408,253,889 (23,405,936,491)
Other non-operating income (loss) Korean Won (27,350,302,117) (16,990,525,014) (107,131,849,529)
Ⅴ. Net income before income tax Korean Won 374,592,360,512 277,301,481,224 1,421,368,007,366
Income tax expense Korean Won 88,767,377,493 133,648,428,872 430,712,512,057
Ⅵ. Profit (loss) for the year) Korean Won 285,824,983,019 143,653,052,352 990,655,495,309
Ⅶ. Other comprehensive income (loss): Korean Won (49,616,382,351) 71,054,245,713 129,623,841,284
1. ‌Items that will not be reclassified subsequent Korean Won 4,649,580,274 (4,617,515,096) (10,256,055,223)
to income (loss):
Re-measurement factor on defined benefit plans Korean Won 3,471,656,621 (4,543,836,146) (8,064,009,146)
Retained earnings using the equity method Korean Won 1,177,923,653 (73,678,950) (2,192,046,077)
2. ‌Items that will not be reclassified subsequent Korean Won (54,265,962,625) 75,671,760,809 139,879,896,507
to income (loss):
Retained earnings using the equity method Korean Won (4,587,971,272)
Pre-tax comprehensive income of AFS financial assets Korean Won 575,825,058 (3,167,559,095) 20,375,203,607
Changes in capital variation of equity method Korean Won (8,274,614,787) 6,877,349,862 10,651,905,170
Pre-tax comprehensive income of cash flow risk hedge Korean Won (5,794,593,290) (491,760,179) 2,946,242,373
Foreign currency translation differences of foreign operations Korean Won (36,184,608,334) 72,453,730,221 105,906,545,357
Ⅷ. Total comprehensive income Korean Won 236,208,600,668 214,707,298,065 1,120,279,336,593
Net income attributable to: Korean Won
Owners of the group Korean Won 287,921,105,894 146,855,718,145 992,512,355,206
Non-controlling interests Korean Won (2,096,122,875) (3,202,665,793) (1,856,859,897)
Comprehensive income attributable to: Korean Won
Owners of the group Korean Won 241,121,331,055 215,432,681,034 1,121,344,570,238
Non-controlling interests Korean Won (4,912,730,387) (725,382,969) (1,065,233,645)
Earnings per share Korean Won
Basic and diluted earnings per share Korean Won 8,546 4,359 29,458
Earnings per share from continuing operations Korean Won 8,546 4,359 29,458
Major Products
Sector Item Unit Sales
Olefin Ethylene, propylene, benzene, toluene, para xylene, ortho xylene, etc. KRW in millions 1,868,811
Monomer Styrene monomer, butadiene, ethylene oxide adduct, ethylene oxide glycol, purified KRW in millions 3,455,585
isophthalic acid, , purified terephthalic acid, methyl methacrylate monomer, etc.
Polymer High density polyethylene, polypropylene, low density polyethylene, polyethylene KRW in millions 6,775,175
terephthalate, linear low density polyethylene, polycarbonate, LFT, EPP, etc.
Others By-products, etc. KRW in millions 164,965
Elimination of internal transactions KRW in millions (551,198)
Total sales KRW in millions 11,713,338
91
Production Capacity of Main Products (Unit: 1,000 tons/year)
110 KTA
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KTA
PXᆞO
490 KTA
PTA
PET
1,100 KTA NAPHTHA LDPEᆞ
E
870 KTA 360 KT VA
A
EO
Prop
EOA
yle
27
0K
ne
TA 180
1,5
0K KTA
0
TA A
DM
KT
13 C
00
ine 1,9
Pyrolysis Gasol 0K
TA
KT P
PC
P
A
BZ
135
650
XL
275 KTA
TL
10
70
0K
KTA
KTA
TA
1,6
SM 0 K
5 8
A T
92
Sustainability Data
Economy
Sales (Unit: KRW in trillions) Financial Assistance

Received from the Government (Unit: KRW in millions)
Domestic worksites 12.1 10.9 8.6 Classification 2013 2014 2015

Overseas worksites 4.3 3.9 3.1 Financial assistance received 1,862* 4,423 3,866
Total 16.4 14.8 11.7 from the government
* R&D subsidy
Society
Employees Employees Represented by the Joint

Classification Unit 2013 2014 2015
Labor-Management
No. of domestic sites sites 11 11 11 Safety and Health Committee (Unit: persons)
No. of employees at persons 2,818 2,928 3,418
domestic sites Classification 2013 2014 2015
No. of overseas sites sites 17 18 18 Number of target employees 1,778 1,794 1,802
No. of employees at persons 2,354 2,427 2,365

overseas sites
Parental Leave (Unit: persons, %)
Employment Status (Unit: persons)

Number of parental leave users 16 14 18
Classification 2013 2014 2015 Number of employees who returned 3 10 12
Total number of employees 2,539 2,739 2,800 to work after parental leave
Employment type Full-time job 2,463 2,646 2,728 Number of employees who have 8 8 14
Part-time job 76 93 72 worked for more than 12 months
after return(%)
Gender Male 2,334 2,468 2,483
Female 205 271 317
Age Under 30 437 634 612 Employees Covered by Collective Bargaining
30s ~ 50 1,635 1,642 1,658
Over 50 467 463 530 Classification Unit 2013 2014 2015
Employees covered by persons 1,168 1,232 1,316
* Employees of Lotte Chemical collective bargaining
Total number of employees persons 2,539 2,739 2,800
Incident Rate Percentage % 46 45 47
Classification Unit 2013 2014 2015

Incident rate % 0.13 0 0.03 Retirement Pension Plan* (Unit: %)
Total number of incidents cases 3 0 1
Defined Benefit Retirement Pension 100 99.6 97.9
Turnover Rate (Unit: %)

Defined Contribution Retirement - 0.4 2.1
Pension
* As of the end of December of each year
Turnover rate 5.0 2.9 2.3
93
Lotte Chemical has been certified for the DJSI (Dow Jones Sustainable Index) Asia Pacific for
five consecutive years.
11F, Lotte Tower, 51, Boramae-ro 5-gil, Dongjak-gu, Seoul

Tel: 82-2-829-4114
http://www.lottechem.com This report was printed on eco-friendly paper with soybean oil based ink.

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LIFE

This report can be accessed on the website of Lotte Chemical (http://english.lottechem.

Corporate Communication Team of Lotte Chemical

16 Lotte Chemical’s 40-year History

Letter from the CEO

Dear valued stakeholders!

About Lotte Chemical

Life Value Creator

Pakistan Hong Kong

Company name Establishment Head Office

CEO Industry Main Products

Resin Product (PE, PP, PC, PET, EVA),

Total assets (‌Based on consolidated Sales (‌Based on consolidated No. of employees

KRW 11,467.8 billion KRW 11,713.3 billion 2,800 persons

Head Office, Plant, R&D Institute Overseas Subsidiaries Overseas Branches

Worksite Subsidiary & Joint Venture Overseas Subsidiary Overseas Branch

Diversification of raw materials

Diversification of business portfolio Selecting and promoting new businesses

VISION 2020 To-be Key Practices in 2016

Developing and managing

Enhancing Core Field-oriented Developing Green Brand

Domestic Worksites and

Korea’s first plant that

A s the PP composite resin with improved functions of

PET (Water bottle)

The well-known plastic bottles that we consume in our daily lives

EVA is a form between rubber and plastic. It is largely used for

Butadiene (BD) is mainly used as the raw material of synthetic

TPE (Earphone Cord)

PC is a plastic material with high intensity, heat resistance, and

Commonly spotted on clothing tags, EG is a major material for

LDPE (Billboard in subway)

LDPE is a part of polyethylene resin. It is easily modifiable,

Polypropylene has various strengths including high heat

SM is a colorless substance made of ethylene and benzene. SM is

LDPE (Paper Cup)

LDPE is a part of polyethylene resin. It is easily modifiable,

PC is a plastic material with high intensity, heat resistance, and

PET (Disposable Packed Lunch)

PC BD The well-known plastic bottles that we consume in our daily lives

EPP (Plastic Footholds)

As the PP composite resin with improved functions of polypropylene,

Lottmer is TPEV ( Thermo-Plastic Elastomer Vulcanized) material

TPO (Front Bumper)

It is made by mixing reinforcement materials with thermoplastic

TPO (Door Trim)

LFT (Rear Bumper Beam)

LFT is made by mixing plastic and special fibers, and boasts

PMMA (Upper Deck of Sink)

PMMA is also known as acrylic resin. It is transparent and weather

HDPE (Chopping Board)

HDPE is a type of polyethylene resin. It is modifiable, resistant to

EOA (Dishwashing Detergent)

EOA is used as a material for detergents, shampoos, personal

HDPE (Shampoo Bottle)

HDPE is a type of polyethylene resin. It is modifiable, resistant to

WPC (Wood Plastic Composite) material has the advantages of

SM is a colorless substance made of ethylene and benzene. SM is

As the PP composite resin with improved functions of polypropylene,

Challenge, Innovation, and Take-off 1989.02

1970-1990 Achieved 4.6 million man

Starting Petrochemical Business 1989.04

Held a ceremony for the

Total assets (‌Based on consolidated Sales (‌Based on consolidated No. of employees

• ‌Choice and concentration • Commercialization-driven R&D • Securing talents