Redefining retail for a greener future: an interview with Lee Sang-yoon

Environmental responsibility is no longer limited to manufacturers and energy companies, but is expanding to businesses worldwide. Consumer-oriented industries are also finding new ways to reduce waste, improve energy efficiency, and promote responsible consumption. In this interview, Lee Sang-yoon at Lotte Duty Free's Marketing Division discussed the company's ESG strategy, its environmental initiatives, and the role businesses can play in building a more sustainable future.

First, could you briefly tell us about the work you’re currently doing?

I work in the marketing division at Lotte Duty Free. My main responsibility is marketing to individual foreign tourists—those who visit Korea on their own, rather than as part of a group tour organized by a travel agency.

You mentioned recently that Lotte Duty Free is pursuing eco-friendly management under the slogan “Duty 4 Earth.” As someone working in marketing, have you personally noticed any changes in the stores?

Yes, as you mentioned, Lotte Duty Free is accelerating its eco-friendly management under the “Duty 4 Earth” slogan. Through our commitment to environmental management and systematic oversight, we’ve obtained ISO 14001 certification—the International Organization for Standardization’s environmental management system certification—making us the first in the Korean duty-free industry to do so. We were the first in the domestic duty-free industry to obtain ISO 14001 certification, which is recognized as an environmental management system. 

The changes we can actually feel are probably most noticeable in terms of paper and electricity. In 2021, we were the first in the industry to introduce a system where customers receive receipts via an app instead of paper receipts when making purchases in-store. This reduces paper waste by about 1 million sheets annually, and reducing this waste can be seen as having a similar effect to planting trees.

Secondly, regarding electricity: after customers make purchases, we ship the items from our logistics centers to the airport delivery points. We are in the process of replacing all the trucks used to transport these goods with electric vehicles. So, if you happen to see an electric truck with the Lotte Duty Free logo while you’re out and about, you can consider that a reflection of Lotte Duty Free’s efforts to reduce our carbon emissions.

What you’ve described sounds like a major change. I also saw news that you’re installing solar panels on the roof of your integrated logistics center to switch to electricity and renewable energy. When introducing such facilities, it’s inevitable that costs will be higher due to environmental and eco-friendly considerations. Given these various factors, how are you pursuing ESG and moving forward?

That’s right. Now that we’ve installed solar panels on the roof of our logistics center, we’re generating and using about 67% of the electricity we consume ourselves. As you mentioned, from a corporate perspective, there’s often a lot of deliberation between environmental considerations and cost savings. However, our current stance is that these two aren’t mutually exclusive—they need to go hand in hand. In the past, cost savings might have been the top priority, but now, if a company fails to protect the environment, its brand value can decline and it risks being shunned by customers. That’s why we believe that investing in environmental protection is, in fact, a key factor in our future competitiveness.

So, taking the solar power system we mentioned earlier as an example, while the initial installation costs are certainly high, it’s saving us about 100 million won annually in electricity bills. Ultimately, those savings translate into cost reductions for the company. So, a decision made for the sake of the environment ends up creating a virtuous cycle that reduces operating costs in the long run. Internally, we view these initiatives as sustainable investments and are actively taking the lead in environmental protection.

That sounds like a very responsible approach. However, since you’re a duty-free shop, you likely use a lot of plastic packaging. Could you tell us how you’ve made eco-friendly changes in this area?

That’s right. Just a few years ago, when we were packing duty-free goods, we actually used a lot of plastic bubble wrap to prevent product damage and facilitate logistics and transportation. However, wrapping each item tightly in plastic like that not only made the packing process take a very long time but also generated a massive amount of waste. However, we’ve now switched from these plastic bags to sturdy, reusable bags for transport. This has not only improved operational efficiency but also dramatically reduced waste within our logistics centers.

From the customers’ perspective, in the early stages—since there were no plastic bags to serve as cushioning—we received many concerned inquiries asking, “Why isn’t there any plastic packaging?” or “Won’t the items get damaged?” However, recently, in line with the trend toward value-based consumption that prioritizes the environment, we’ve seen a significant increase in positive feedback, such as, “I actually prefer the simpler packaging,” and “The reusable bags are sturdy and perfect for use while traveling.”

Another interesting element was the eco-friendly brand zone at the World Tower store. Could you tell us more about this ESG-certified zone?

In the case of the eco-friendly brand zone at the World Tower store, it seems that this space—which brings together eco-friendly products—has evolved beyond simply being a sales area to play a role in significantly transforming the atmosphere. In particular, among the younger generation—as well as both domestic and international customers—we’re seeing a significant increase in young customers who, rather than simply seeking out bags or products from famous luxury brands, are increasingly looking for practical items like bags made from recycled materials or vegan cosmetics.

As a result, brands seeking to enter duty-free stores have begun emphasizing how eco-friendly their products are and how they are contributing to ESG management. Consequently, as the popularity of these eco-friendly zones rises, other general brands are also shifting toward a mindset where they are actively promoting environmentally conscious initiatives, such as switching to paper packaging.

Given that ESG is not just about individual companies or consumers, I heard that Lotte Duty Free has an ESG support program for its partners. Could you tell us more about this program?

We’re expanding our activities based on our growth, but from Lotte Duty Free’s perspective, this kind of management can’t be revitalized simply by us doing well on our own. That’s why we’re actively helping smaller SMEs and partner companies implement ESG management as well. For example, in collaboration with the Shared Growth Committee, we’re supporting small and medium-sized partner companies by providing ESG training and tailored consulting services. Furthermore, if a partner company receives ESG excellence certification through these efforts, we actively assist them in securing tangible benefits, such as preferential bank interest rates and export support.

We have also established a fund worth approximately 50 billion won to help partner companies borrow funds at low interest rates to operate their businesses or implement ESG initiatives. Furthermore, we are creating a system where partner companies can grow together by providing free promotional support—such as listing products from lesser-known SMEs in online duty-free shops or featuring them prominently on the homepage.

You’ve spoken today about a wide range of initiatives. As you reflect on these efforts, could you explain how you plan to introduce new changes moving forward—and how you intend to maintain your commitment to eco-friendly ESG practices?

We intend to ensure that Lotte Duty Free’s activities do not remain merely the efforts of a single company. Instead, we plan to continuously expand ESG management in collaboration with partner companies through mutual growth and cooperation. This involves implementing the various forms of support we’ve just discussed, as well as gradually putting into practice and scaling up the actions we can take to improve the environment. We are committed to transforming this into a sustainable model, not one that operates for just a limited period.

Finally, from a corporate perspective, there is a widely held perspective that the cost is the biggest obstacle to introducing eco-friendly systems and changes, and that protecting the environment is not the responsibility of businesses. Given that Lotte Duty Free is making such significant efforts that are in stark contrast to that stance, what are your thoughts on that perspective?

I believe that all companies must now step up to work together to create and preserve this environment, because ultimately, if this environment is not preserved, there will be no future competitiveness at all. So, as I mentioned a moment ago, I hope that all companies will share the view that preserving this environment is one of the ways to invest in the sustainability of our businesses, and that they will put ESG management into practice accordingly.