POSCO E&C Sustainability Report 2012
Leading Sustainable Management
Engineering Procurement Construction CONTENTS
Strategies and Management System CEO Message 04 Company Overview 06 Vision and Strategy 08 Risk Management 11 Corporate Governance 12 Ethics Management 13 Sustainability Management System 14 ABOUT THIS REPORT Stakeholder Engagement 16 Materiality Test 18
Structure and Features Improvement of Sustainability in Projects The POSCO E&C Sustainability Report 2012 was written to share the company’s efforts for and achievements in (centered on E, P, C) sustainable growth with stakeholders as well as introduce how its sustainability management activities have been More Advanced Engineering Technologies 20 conducted at project sites. Sustainable Procurement System 26 Sustainable Construction Considering Safety, 32 Strategy & Management Environment, Health, and Quality
Sustainable Projects Sustainable Management Harmonization of Profit & Growth Development of Future Core Technology 40 Reinforcement of Global Quality Management 44 Engineering Procurement Construction Economy Environment Society Constant Management Innovation and 46 Profitability Enhancement
Strengthening Environmental & Principles Safety Management This report follows the G3.1 Guidelines for Sustainability and the Construction and Real Estate (CRE) sector supplement Settlement of Environmental Management and 52 index provided by the Global Reporting Initiative (GRI), and focuses its explanation on the core subjects and issues, Adaption to Climate Change delineated by the ISO26000, an international standard on social responsibility. As for stakeholder participation and Encouragement of Responsible Safety Management 56 analysis of the materiality of issues, the company also followed the international standard of the AA1000 SES (Stakeholder Improvement of the Shared Social Value Engagement Accountability Standard). To ensure the objectivity and transparency of the content, POSCO E&C Enhancement of Customer Value and Satisfaction 62 commissioned DNV (Det Norske Veritas) f or a third-party assurance and the Statement of Assurance provided by DNV is Fostering Global E&C Leaders 66 included on Page 88 of this report. Pursuit of Win-Win Growth with Business Partners 70 Social Contribution to Local Communities 72 Period and Scope The period of reporting for the POSCO E&C Sustainability Report 2012 is from January 2012 to December 2012. As for Appendix some major issues of significance, relevant data reported until the first half of 2013 is included in this report. We aim Financial Information 79 to report all aspects of POSCO E&C’s domestic and overseas business areas including projects sites in principle, but Organization Chart 80 the scope of environmental data covers 134 project sites and 4 buildings in Korea. As for quantitative data, only those Awards & Association Membership 81 pertaining to POSCO E&C were included. Data concerning subsidiaries and business partners that were included in the GRI G3.1 Index 82 report were specified. Statement of Third-Party Assurance 88 Contact “FOR A BETTER WORLD” is POSCO E&C’s commitment to creating Statement of Assurance Report of Greenhouse 90 a better world by fulfilling its corporate social responsibilities. This Gas Emissions commitment drives the sustainability of POSCO E&C and society CSR Group, General Administration Division, POSCO E&C by being embedded in all our businesses including engineering, UN Global Compact 91 TEL: 82-32-748-3737 FAX: 82-32-748-4006 E-mail: [email protected] procurement, and construction. Glossary 92 04 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 05
CEO Message
Dear Our Stakeholders Strengthening Environmental and Safety Management It is an honor to present this, our second annual Sustainabil- ity Report, to you. Global interest in protecting the environment and people continues to increase, and any accident can incur serious POSCO E&C achieved a record over KRW 7 trillion in sales in costs to both the company and the community at large. At 2012 despite the unfavorable business environment, marked POSCO E&C, we realize the need to minimize environmental by a weak domestic construction market and sluggish glo- impact and prevent accidents in all of our activities. In ad- bal economy. Our remarkable accomplishment is attribut- dition, our management of greenhouse gas emissions has able to the enthusiasm and dedication of all POSCO E&C been tightened by the establishment of a greenhouse gas employees, who have continuously challenged themselves inventory, while the safety awareness of our employees has to realize our vision of “Evolving into One of the Global Top been reinforced through monitoring and improved activi- 10 E&C Companies by 2020.” Our race towards this vision is ties at all worksites. POSCO E&C is firmly committed to im- driven by our forward thinking, advanced technologies, and proving the environment and safety management system passion for what we do. constantly as well as to initiating onsite accident preven- A shift in our business paradigm has also strengthened the tion activities to increase awareness of our responsibility to foundation for growth. Enterprises are now expected to protect the environment and workers at all times at every pursue sustainable growth from the long-term perspective, project site. moving beyond the conventional emphasis on immediate profit and quantitative growth. Sustainability management Improvement of the Shared Social Value is especially important for the construction industry, which We aim to accommodate diverse stakeholder interests and has a major impact on economic, environmental, and so- thereby earn the public trust in the course of doing our busi- cial value. We understand the importance of sustainability, ness. Our social contribution activities are directed at help- and our management program proactively addresses the ing to resolve problems in the local communities neighbor- changes in the business environment and requirements ing the sites so that we grow as those around us do. We also of our time. Our focus is on the following areas so that we provide our suppliers with a broad range of supports for achieve sustainable growth and become a global E&C com- fair trade and Win-Win growth. We put our customers first pany that all stakeholders admire: and develop customized solutions for them so that value is raised for all parties. The Thanks-Sharing program partici- Harmonization of Profit and Growth POSCO E&C will grow into a major global E&C company by pated by all executives and employees will be embedded in We aim to build the very best steel plants, power plants, and our company as a unique corporate culture to enhance their focusing its competencies on building top-tier products eco-friendly urban development, and explore profitable over- sense of ownership, mutual trust, and the safety conscious- on the global stage. Also our economic, environmental, seas markets. Success in these areas will lay the groundwork for ness at project sites. sustainable growth and turn the currently tough business and social sustainability management programs will be I invite all of you who have supported POSCO E&C so gener- environment into future opportunities. In addition, we will de- ously to examine how we are keeping our pledge to stake- accelerated to meet your expectations. velop core technologies, strengthen our quality competency holders. Going forward, we will continue to carry out our continuously and win high-quality projects while ensuring economic, environmental and social responsibilities, and will qualitative growth centered on profitability and financial maintain an open communication with you so that we grow soundness. Ongoing innovation will also reduce costs and as a trusted and respected enterprise. strengthen the profit structure so that we maintain a harmo- nization of profit and growth.
Vice Chairman & CEO Chung, Dong-Hwa 06 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 07
Company Overview
POSCO E&C is a global E&C company leading the construction industry based on plant engineering technology and We are engaging in plant, energy, civil and environment, and architecture projects in 16 countries throughout Asia, the knowhow with global competitiveness. Middle East, South America, and Europe. Our progress is founded on the basis of ethics management and respect for the mankind and environment, which is our way of evolving into a reliable global company.
Total assets
Kazakhstan 1 KRW 9,201 billion Poland Total equity China 3
U.S. 1 1 Turkey Uzbekistan South Korea(HQ) KRW 2,829 billion Israel Sales UAE 1 Mexico 1 El Salvador 1 Saudi Arabia 1
Vietnam 3 1 KRW billion India 1 8,637 Venezuela 1
Operating profit Indonesia 1 Cambodia 1 1 Peru 1 Brazil 1
KRW 326 billion
Credit ratings Australia 1 Chile 1 Baa3 (Corporate bond, Moody’s) A1 (Commercial paper, Korea Ratings)
(As of December 31, 2012, consolidated financial statements) overseas subsidiaries: 14 overseas branches: 7 overseas offices: 2 (As of March 2013)
Plant Energy Civil & Environment Architecture
Plant Energy Civil & Environment Architecture
Based on plant engineering technology accumulated from the construction of Winning orders for the construction of coal-fired power plant projects in Chile and POSCO E&C has been contributing to the growth of local communities around POSCO E&C demonstrates experiences in constructing skyscrapers by utilizing Pohang and Gwangyang steelworks and top-notch technology including the FINEX Peru proved our global competitiveness in the energy business as well as became the world by constructing social infrastructure such as roads and harbors in Korea, advanced high strength concrete and wind vibration control technology. process that is an innovative technology for the steel industry, POSCO E&C has been a milestone in entering the energy plant market in Central and South America for Vietnam, Kazakhstan, and Uzbekistan. Our portfolio includes the construction Those buildings have demonstrated outstanding values by obtaining the LEED demonstrating its competitiveness on the global stage. As the only total solution a Korean construction companies. We are also expanding our reach to the eco- of environmental facilities for air cleaning, resource recycling, and sewage and certification. In addition, we are conducting urban development projects in Korea provider for steel plant EPC projects in the world, we are conducting the CSP steel friendly energy business field which includes wind power, solar power, and future wastewater treatment. We are also striving to develop and commercialize seawater and Vietnam, which allows us to accumulate new technology and knowhow within plant project in Brazil and an integrated steel mill project in Indonesia, which raise our energy fields such as SNG (Synthetic Natural Gas) and CCS (Carbon Capture and desalination technology to provide solutions to the water scarcity issue of the world. the various construction fields. status in the world. Storage). 08 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 09
Vision and Strategy
Even though the global economy is still under recovery and the domestic construction industry is lackluster, POSCO E&C will do its utmost Expanding in Overseas Markets to achieve the vision and management goal of “Evolving into One of the Global Top 10 E&C Companies by 2020” by coping with a rapidly- Our business region is expanding into Southeast Asia, Central and South America, and Eastern Europe. In particular, we have focused changing business environment based on its 3 core strategies. on developing the Central and South American market that had been an undeveloped area for Korean construction companies. As a result, POSCO E&C has been able to conduct various projects in Brazil, Chile, and Mexico. The acquisition of Santos CMI, one of the top five construction companies in Central and South America, has been the cornerstone to stand in a steady position in the region and helped expand business networks and to reinforce the project capabilities. We succeeded in winning the CSP steel plant project in Brazil amounting to KRW 5 trillion, which was the second largest project order as a single plant project performed by a Korean construction company. In 2012, we received orders for a thermal waste incineration plant project from the city of Krakow in Poland and a hot rolling mill project in Vietnam from Formosa. Thanks to the high recognition of our technological competitiveness from overseas customers, our overseas projects have been increasing since 2010, which accounted for 34% of total sales in 2012. Vision KRW 50 trillion in new orders, KRW 30 trillion in sales, and realizing over 70% of sales from overseas market by 2020
Management Goal Enhancing technological competitiveness and profitability to evolve into one of the global top 10 E&C companies Proportion of Sales from Domestic and Overseas Projects (Unit: %)
Domestic Overseas Expanding top-tier products and Securing global competitiveness for Promoting internal management Core Strategy overseas markets EPC projects centered on profitability 11 29 34 • Expansion of 4 flagship and 5 target businesses • Global standardization of project management • Innovative improvement of profit structure • Enhancement of engineering capability • Reinforcement of global procurement capability • Emphasis on cash flows and enhancement of Action Plans • Expansion of overseas markets based on M/I • Realization of the GSI (Global Standard Instance) financing capability • Pinpoint recruitment and cultivation of experts 2010 2011 2012
*M/I: Market Intelligence 89 71 66
Establishment of Management Strategies to Cope with Market Changes
POSCO E&C pursues internal stability rather than an external growth strategy based on scenario management. To this end, we are focusing on three core strategies; expanding top-tier products and overseas markets, securing global competitiveness for EPC projects, and promoting internal management Thermal Waste Incineration Plant Project in Poland centered on profitability. The first strategy is promoted by expanding 4 flagship and 5 target businesses, enhancing engineering capability, and tapping into POSCO E&C secured a bridgehead of tapping into the Eastern European market among more overseas markets based on M/I. Action plans for the second strategy include global standardization of project management, reinforcement of global Korean construction companies by first winning an EPC contract for a thermal waste procurement capability, pinpoint recruitment, and cultivation of experts. The third strategy will be driven by an innovative improvement of the profit structure incineration plant project from the city of Krakow in Poland. This project is to build an incineration plant to convert energy generated from the incineration of household waste and an enhancement of financing capabilities. into renewable energy. It is an eco-friendly power generation project to maximize energy efficiency and reduce greenhouse gas emissions. By exclusively winning this project after a Operation of the Global PEPCOM System [ Biz Model ] fierce competition with advanced competitors, we proved our top-notch engineering and construction technology in the thermal waste incineration plant project. We will continue to POSCO E&C is strengthening a comprehensive range of its capabilities, from planning/engineering and Bird’s Eye View of the Thermal Waste strive to dominate the eco-friendly project market in advance of Poland and Eastern Europe. Completion of a comprehensive Incineration Plant in Poland procurement to construction, operations, and maintenance (PEPCOM) in an effort to meet increasing overseas PEPCOM range of capabilities from planning/ engineering to procurement, projects. Major activities to strengthen the PEPCOM system include securing EPC project capabilities which PEPCOM construction, operations, and Completed maintenance Hot Rolling Mill Construction Project in Vietnam for Formosa meets the global standard, operating high-level management systems for quality, safety, and environment. Since winning a USD 400 million contract to build material processing facilities of an Also, we plan to discover competitive business partners domestically as well as abroad in order to foster global integrated steel mill from FHS, a subsidiary of Formosa in Taiwan, in 2012, POSCO E&C made Establishment of advanced procurement capabilities and to operate a global integrated system for effective decision making with overseas pEPCom project management capabilities another contract amounting to USD 300 million (KRW 316.9 billion) for a hot rolling mill subsidiaries and project sites. These efforts will stimulate our global growth, through which we will foster steel, EPC from planning/engineering to construction project with FHS in April 2013. The hot rolling mill construction project is under Centered procurement and construction power, and eco-friendly urban development projects as global top-tier products to contribute to the national construction at Ha Tinh State in Vietnam and will be completed in May 2015. This facility is constructed in an integrated steel plant with a production capacity of 7 million tons a year economy and lead the global market. and will produce about 5.3 million tons of hot rolling sheets every year. POSCO E&C beat out *PEPCOM: Planning, Engineering, Procurement, Construction, Operation, and Maintenance pePCom Participation in projects at 5 major construction companies of Taiwan and China to win this project, which proved its procurement or construction stage Contract with Formosa for Hot Rolling Mill C Centered global competitiveness in the steel mill construction sector once again. Construction Project in Vietnam 10 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 11
Risk Management
Business Portfolio for Internal Growth POSCO E&C operates an integrated risk management system throughout the whole project process. All risks are thoroughly analyzed from the early stages of deliberation on orders and diverse issues related to market advancement Our main priority of management strategy is internal growth over external growth. To meet the demand for increasing overseas projects, or project implementation are inspected in order to prevent losses. we have expanded our business portfolio into 9 sectors and are endeavoring to foster global top-tier products. By utilizing strengths acquired from our existing business portfolio, we will not only concentrate our efforts on our flagship businesses such as steel plants, power plants, and eco-friendly urban development projects, but strengthen coal-fired power, offshore wind power, seawater desalination, Classification and Management of Risks long span bridge, and skyscraper projects based on differentiated technology and professionalism. The construction industry faces various variables compared to other industries because many stakeholders including customers,
PEPCOM 2020 Business Portfolio investors, banks, subcontractors, and business partners are involved. In addition, managing risks becomes more important due to increasing uncertainties in the business environment triggered by changes in exchange rates, rise of new technologies, and rapidly-
4 Flagship Businesses 5 Target Businesses changing customer needs. Therefore, POSCO E&C enhances its corporate value by operating an integrated risk management system throughout all stages from order-receiving to construction.
Urban Water and New & Renew- Steel Plant Power Plant Railroad Port Mining Petrochemical Development Environment able Energy [ Risk Classification ] Risks in the Construction Industry Synergy Management to Increase Joint New Orders Economic Risk Policy Risk Sales Risk Construction Risk Management Risk Since the establishment of the E&C Synergy Management Council, the amount of joint projects has been increasing through various cooperative activities of the POSCO Family. The E&C Synergy Management Council is held every year to inspect the management status. • Changes in demand for • Political instability • Deterioration of selling • Cost increase/bankruptcy of • Wrong decision making products • Change of government condition partners • Insufficient process/standard Particularly, the newly established Working Group for Safety which is controlled by the Planning and Support Subcommittees to manage • Economic recession • Changes in systems and • Bankruptcy of developer • Occurrence of civil complaint • Negligence risks is conducting various activities including education on safety and benchmarking of outstanding project sites. • Changes in exchange rate policies • Disputes with contracting parties • Occurrence of disaster/defect • Unstable financing condition • Labor-management dispute • Acquisition of financial liabili- • Construction period ties due to guarantees extension [ E&C Synergy Management Council (As of June 2013) ]
Strategy Committee Preliminary Deliberation on Project Risks Planning and Support Safety We thoroughly manage risks from the initial sales stage, before we even begin receiving orders, in order to prevent losses in the project
implementation stage. Considering the characteristics of the construction industry, risks are measured quantitatively by using checklists Subcommittees Plant Energy Architecture Civil & Environment Technology for general matters, bidding conditions, profitability, construction, and performance guarantees. Risks are classified into a company- POSCO E&C POSCO Engineering POSCO PlantEC POSCO A&C wide deliberation (Class A), RM deliberation (Class B), and deliberation by division (Class C) according to the level. The Class A risks Participants Sungjin Geotec Daewoo International POSCO ICT POSCO are intensively analyzed and managed according to contract conditions, profitability, construction risk, national risk, and licensing risk through the Order Deliberation Committee. Amount of Joint New Orders (Unit: KRW in billions) [ Preliminary Deliberation on Project Risks ]
2010 133.1 Company-wide Deliberation RM Deliberation Deliberation by Division Management Level 2011 743.2 Class A Class B Class C
2012 1,033.9 Project Environment/ Risk Deliberation Area Legal Affair Tax & Accounting Finance Audit Management Safety/Health Strategy Committee of the E&C Synergy Management Council
Financial Strength Approved by Domestic and Overseas Organizations Non-financial Risk Management
In 2012, POSCO E&C obtained an AA- credit rating from the Korea Ratings and Korea Investors Service, an A1 from NICE Investors Service, The Q-HSE (Quality, Health, Safety, and Environment) Executive Meeting is held to manage non-financial risks at the company level, domestic credit rating agencies, and a BBB- from S&P, an overseas credit rating agency. The Mega-Y, which is the core task led by the top through which we establish policies to manage quality, health, safety, and environment risks and deliberate on related issues. To prevent management, will be pursued to increase profitability, and financial soundness will be also enhanced by focusing on effective investments quality, health, safety, and environment risks during the implementation of projects, we prepare management policies by reviewing all and financial management centered on cash flow. the requirements by the customers in the contract and comply with local regulations and licensing. 12 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 13
Corporate Governance Ethics Management
The Board of Directors (BOD) of POSCO E&C deliberates and decides on important management activities in order to POSCO E&C is building and practicing a global ethics management system to prevent risks caused by unethical sustain the corporate vision. POSCO E&C is also committed to securing healthy corporate governance for long-term growth. behavior and encourage ethical decision making throughout our business operation. In addition, ethics training is being expanded to raise employees’ awareness of ethics.
Structure Reinforcement of the Global Ethics Management System To enhance the efficiency and transparency of management as well as financial soundness, POSCO E&C has appointed the BOD. The BOD, composed of 9 executive board members and 1 non-executive board member, chaired by the Vice Chairman and CEO of Implementation of Code of Conduct and the Guidelines for Compliance with the FCPA POSCO E&C. The BOD, as stipulated in the Charter of Incorporation, has the right to make decisions on significant matters such as POSCO E&C has presented the criteria of ethical behavior and anti-corruption policies by establishing the Code of Conduct and the management policies and goals, medium and long-term management plans, appointment of the President, and issues related to Guidelines for Compliance with the FCPA (Foreign Corrupt Practice Act). All our employees are required to comply with the criteria of finance. The BOD informs and improves the company’s awareness of its role in protecting customers and the environment, while always ethical behavior and anti-corruption policies and to make a pledge to abide by the Code of Conduct annually. striving for a better and fuller understanding of the outputs and outcomes following its economic, environmental and social activities. The remuneration for the members of the BOD and the management is provided in different levels based on regular review and performance evaluations and is subject to the limits set at the general shareholder’s meeting every year. Prevention of Risks Related to Ethics and Fair Trade To prevent risks related to ethics and fair trade, we conduct departmental ethical practical assessments, inspections by checklists, and surveys on ethics knowledge by the POSCO Family. In 2012, a total of 191 departments and project sites have been inspected. Moreover, Operation of the BOD a number of channels are available for reporting violations of the ethical code, including the online reporting bulletin, the telephone The BOD convenes both regular and emergency meetings, and emergency meetings. The regular meetings are held on the second hotline, and the Reward System for Reporting Unethical Activities. In 2012, the reward limit increased to KRW 1 billion in order to declare Tuesday of every month and the emergency meetings are held when necessary. During 2012, a total of 96 agendas were reviewed a strong pledge to prevent unethical behavior. through 31 BOD meetings. Measures to Unethical Behaviors Audit System Salary reduction or disciplinary action is taken in response to employees’ unethical behavior found through the online reporting bulletin and audit. In 2012, a penalty and correction order were implemented on POSCO E&C with respect to a collusive bidding with eight To enhance the efficiency and transparency of the decision-making by the BOD, POSCO E&C appoints an independent standing auditor major construction companies who participated in the Four Rivers Refurbishment Project. A lawsuit is being carried out for restraint and the Corporate Audit Department as a subsidiary body, composed of the Audit Planning Group, Auditing Group 1, Auditing Group 2, punishment against the Fair Trade Commission, while POSCO E&C conducted compulsory education for all employees and a campaign and Ethics Group. The standing auditor is appointed at the general shareholders’ meeting and given internal mechanisms and access to for the improvement of fair trade in order to prevent recurrence of similar cases. the necessary management information, assuring the auditor’s independence. As stipulated in the Charter of Incorporation, the auditor can attend the BOD meetings to state his opinions and demand the directors to report on their activities. Additionally, a separate audit [ 3 Principles for Internalization of ethical regulation is allowed to review necessary documents. Expansion of Ethics Management Training Ethics Practice ] behaviors through continuous training Ethics Training BOD Members Ethics training to prevent anti-corruption behavior such as Harsh punishment Practice of ethics Position Name Duty bribery is provided to all employees and additional training against unethical management led by Harsh Leading by Chung, Dong-Hwa Vice Chairman & CEO behavior through executives and mem- Punishment Example is conducted for department members with a high risk of regular prevention bers of high positions Yoo, Kwang-Jae President / Energy Engineering & Construction Division, Civil & Environment Division, Architecture Division, unethical behavior. Our major ethics training program includes training and inspections (directors) Australia Business Unit, Domestic Business Department FCPA Guidelines, department-customized ethics training, and Kim, Sung-Kwan President / Plant Engineering & Construction Division, Brazil CSP Business Unit case studies on unethical behavior. Senior Executive Vice President / Plant Engineering & Executive An, Byung-Sik Construction Division Board Member Lee, Dong-Man Senior Executive Vice President / General Administration Division Pledge to Ethics Practices Lee, Yeong-Hun Senior Executive Vice President / POSCO E&C held the “Pledge to Ethics Practices” event in which Strategic Planning Division Si, Dae-Bog Executive Vice President / Architecture Division all the employees participated in order to raise the awareness of Park, Geun-Dong Executive Vice President / Civil & Environment Division complying with ethics. The event gave all of us an opportunity to Cho, Gyu-Jin Executive Vice President / Global Marketing Division solidify the determination for the practice of ethics and declare Non-executive Kim, Jun-Sik President of POSCO / Growth & Investment Division the commitment internally and externally. Board Member BOD Members of POSCO E&C Pledge to Ethics Practices 14 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 15
Sustainability Management System
POSCO E&C practices sustainability management in an effort to gain greater trust from all its stakeholders. Based on the Performances by Strategic Direction common core values of the POSCO Family, POSCO E&C established the sustainability management system composed of 4 strategic directions - strengthening sustainability management culture, establishing infrastructure, developing Reinforcement of Sustainability Management Culture businesses for sustainable growth, and activating stakeholder communication. POSCO E&C will actively respond to the POSCO E&C practices company-wide Thanks-Sharing activities, through which all employees share the sense of thanks with their requirements from the stakeholders and changes in the business environment as well as pursue sustainable growth family members, colleagues, and stakeholders. These activities contribute to strengthening mutual confidence and providing a through continuous monitoring and improvement activities. foundation for becoming a company that is embraced by all its stakeholders. In particular, the Thanks-Sharing activities at project sites help workers build a sense of ownership by expressing appreciation mutually, which eventually leads to voluntary safety Establishment and Practice of Sustainability Management Process practices and encourages a corporate culture for sustainability management in the construction industry. Process Establishment Our sustainability management is being administered in a 5 phase process. It is conducted in accordance with 4 major strategic Establishment of Sustainability Management Infrastructure directions and taskforce teams are composed for areas that need improvement. The performances are continuously reviewed by The infrastructure, including internal policies and systems for sustainability management, has been established at POSCO E&C. The CSR Group and effective action plans are prepared by reflecting recent trends of sustainability management obtained from advices environmental management was strengthened by the completion of an inventory system to manage greenhouse gas emissions of outside specialists, which contributes to enhancing the efficiency of our sustainability management process. and each area also conducted various activities to strengthen sustainability management. Meanwhile, we are building infrastructures for areas with growing importance such as human rights and the reflection of CSR issues in the evaluation of business partners. [ Sustainability Management Process ] Business Development for Sustainable Growth Performance Activities Based on Monitoring of Publication of To evolve into one of the global top 10 E&C companies, POSCO E&C is fostering global top-tier products. Based on our strong Establishment Improvement Activities Review and Target Strategic Directions Activities Sustainability Report of Sustainability Establishment engineering capabilities, we are focusing on 4 major project categories, which are steel plants, power plants, urban development Management System Sustainability Management TFT: General - CSR Group/Practice and Operation - Responsible Departments and Persons Related to projects, and railroad projects. Green buildings and carbon-free city development projects are also being promoted by utilizing Safety, Environment, Ethics Management, Employees, Social Contribution, Business Partners, and etc. engineering technologies developed in response to climate change.
Improvement of Strategic Directions & Enhancement of Promotion Activities Activation of Stakeholder Communication POSCO E&C has been active in collecting stakeholders’ opinions and reflecting them to its management activities in order to Promotion of Improvement Activity invigorate stakeholder communication. In particular, the company has promoted social contribution activities for local communities around project sites in an effort to respond to local problems or issues. POSCO E&C will continue to proactively communicate with The promotion of effective sustainability management requires company-wide participation and effort. We identified improvement stakeholders by diversifying communication channels to collect their opinions. tasks to achieve certain goals for each area and organized a TFT composed of 19 members. As of June 2013, the TFT is conducting tasks in 5 areas (human rights, environment, social contribution, business partners, and employees). We will continue to strive to [ Sustainability Management Promotion System ] internalize sustainability management by operating internal organizations for improvement activities every year in accordance with our sustainability management process. Vision ONE OF THE GLOBAL TOP 10 E&C COMPANIES
Becoming a company to be embraced by all its stakeholders that pursues sustainable growth [ Major Improvement Tasks for Sustainability Management ] Goal Performance Review and Reporting through stakeholder-oriented management activities We monitored our sustainability activities and reviewed Classification Division Task Culture performances to ascertain the results of improvement Construction Contract Including human rights in making Infrastructure Development Communication Human Rights Reinforcement of Group contracts with business partners Directions Establishment of sustainability Business development for Invigoration of stakeholder activities and propose new targets. Completed tasks have been sustainability management Establishment of mid-/long- management infrastructure sustainable growth communication Safety & Environment culture substituted by new targets and unfulfilled tasks were rebooted Environment term strategy in environmental Group by new methods to achieve the goals. Performances and goals management • Promoting Thanks-Sharing • Building environmental data • Enhancing engineering • Conducting local community- Social Development of social contribution generated from these activities were presented to stakeholders CSR Group activities management system capability centered social contribution Contribution manual for overseas sites Practices through the publication of the sustainability report. • Enhancing global ethics • Building global capability • Constructing green buildings • Practicing customer-centered Business Procurement Strategy Reflection of CSR elements in management system development system and carbon-free cities management Partners Group business partner evaluation Labor Relation & Welfare Promotion of certification related to Employees Core Values CUSTOMER CHALLENGE EXECUTION PEOPLE INTEGRITY Group organization culture 16 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 17
Stakeholder Engagement
Operation of Diversified Communication Channels Interviews with Stakeholders
Sustainable growth at POSCO E&C is driven by stakeholder-centered management activities. POSCO E&C divides stakeholders into POSCO E&C makes a variety of active efforts to reflect the opinions of stakeholders in its sustainable management activities. Through local communities, business partners, investors, customers, employees, and environment, and has established diverse communica- interviews with experts, the company was able to hear their assessments of POSCO E&C’s sustainable management activities and tion channels for efficient feedback. Important issues with high expectations from stakeholders collected through the channels are suggestions for strategic directions of future development. proactively reflected to our management activities. 01 Choi, Han-Seung l Senior Researcher of Korea Ratings Corporation POSCO E&C has expanded its business into Central and South America, Southeast Asia, and Eastern Europe beyond the Middle POSCO E&C is committed to contribut- Based on mutual trust with business With transparent corporate gover- ing to the creation of culture and so- partners, POSCO E&C establishes nance, we seek to communicate and East where most domestic construction companies have mainly entered. In particular, large-scale projects such as the CSP steel cial value with social organizations and future-oriented relationships through build trust with stockholders and plant in Brazil and the thermal waste incineration plant in Poland allowed POSCO E&C to secure growth engines in the global government by fulfilling its corporate securing a healthy supply chain and provide investors with economic per- market. As there are diverse risk factors in construction, delivery, and cost control for overseas business, it will be necessary to social responsibilities. pursuing Win-Win growth. formances. strengthen project management capability. Communication Channel Communication Channel Communication Channel • Win-Win Growth Supporters • IR briefing (quarterly) • Social contribution program 02 Yang, Choon-Seung l Executive Director of Korea Social Responsibility Investment Forum • Discussion meeting with opinion • Satisfaction survey of business • DART system leaders partners • Face-to-face meetings (frequently) Climate change and biodiversity may be the most important issues in the construction industry. In the aspect of climate • Participating in surveys by • Survey (public perception) • Discussion meeting with change, it is necessary to encourage business partners to reduce greenhouse gas emissions considering that more than 70% business partners domestic and global credit-rating providers of emissions come from them. It might be a good idea to participate in the CDP Supply Chain, an international private initia- tive on greenhouse gas reduction, to support your business partners. In regards to biodiversity, your company needs to make Local Communities Business Partners Investors efforts for habitat management to protect species when carrying out overseas projects.
Procurement of high 03 Lim, Hyun-Jeong l Officer of Korea Environmental Industry and Technology Institute Support for Win-Win quality construction Despite tough business conditions, POSCO E&C has achieved remarkable growth with its unique frontier spirit. It is believed Contribution to the Provision of human growth by fair trade materials, technology, Capital investment Return on investment development of and physical resources human resources, that your company will display similar results in the environmental business area. Your participation together with 10 business local communities and equipments partners in the Green Management Expansion Support Project sponsored by the Ministry of Environment will greatly contrib- through job creation ute to establishing a cooperative green management system for Win-Win growth with business partners. I hope POSCO E&C take the lead in green management in the construction industry by creating favorable performances through this project.
04 Choi, Hyuk-Jun l President of Lime Globe It is thought that social contribution activities of POSCO E&C are faithful to the basics. We can understand your commitment to doing best effort as a member of local communities through social contribution activities around construction sites. Moreover, Provision of reward Achievement of volunteering works by POSCO E&C employees provide great support to sustainable lives of beneficiaries. It seems that your Provision of services Creation of profits and capability corporate goals Energy and Minimization of and products to through sales development through innovation resources environmental social contribution philosophy is also gaining high recognition in the global market. I hope your social contribution activities satisfy customers activities opportunities and productivity impact play a role in increasing your corporate reputation. improvement
05 Lee, Seok-Jin l Deputy Director of Anti-Corruption and Civil Rights Commission Customers Employees Environment Your corporate reputation and trust gained from the society will be the source of your sustainable growth. Beyond just dealing with unethical behaviors, it is more important to improve the level of ethical culture by opening the contents of reports col- POSCO E&C aims to provide customers Recognizing employees as partners in For the future of society, POSCO E&C lected through the Help Line to customers, business partners, and other stakeholders who are concerned about ethical issues. with emotional value beyond physical sharing the purpose of corporate exist- pursues green growth through the de- and economic values. ence and the starting point of creating velopment of eco-friendly products and Operating an open information system to analyze what is required for further improvement of ethics will help POSCO E&C performances, POSCO E&C strives to cre- technology. shape its corruption risk management strategy more effectively. ate a desirable workplace. 06 Sim, Jae-Myeong l President of Seil E&C Co., Ltd. Communication Channel Communication Channel Communication Channel POSCO E&C and our company jointly entered Chile and Peru and has gained good reputations from clients by successfully • The Sharpist (an advisory group of • Labor-Management Council • Eco-friendly construction and R&D housewives) • Junior Board • Improving environmental conducting construction projects. We aim to make inroads to neighboring countries and develop more projects after secur- • Website • Company’s internal management process ing cost competitiveness. I believe POSCO E&C’s commitment to the collaborations with business partners will fully meet the • Customer satisfaction survey bulletin board • Environmental campaign concept of Win-Win growth and creative economy led by the government. 18 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 19
Materiality Test
We identified 33 material issues in regards to sustainability through the analysis on global standards for sustainability Media Research l We investigated news reports of the 12% management, benchmarking, media research, and reviews on internal management status. A direct stakeholder survey media with respect to sustainability management activities 29% was conducted to understand the level of interest in each issue and key reporting issues were selected in consideration of POSCO E&C and the construction industry in 2012. A total of their influences on POSCO E&C’s businesses. This report contains POSCO E&C’s sustainability management structure of 172 articles on POSCO E&C and 110 articles on the industry Breakdown of News Reports 3% to manage key issues and performances. were identified, and then the frequency was analyzed after classifying the articles by the TBL (Triple Bottom Line) methods 56% - economic, social, and environmental aspects. [ Materiality Test Process ]
Step 1. Indirect Stakeholder Survey Step 2. Direct Stakeholder Survey Step 3. Selection of Key Issues Period: January 1, 2012 ~ December 31, 2012 Economic Environmental Social Common Media: Nationwide and regional daily newspapers, daily economic newspapers, internet media, regional weekly newspapers, and TV, etc. Analysis on Benchmarking Media Internal and global standards of leading research & external stake- Internal Materiality for sustainability global reviews on holder interview review test Step 2. Direct Stakeholder Survey management companies internal issues and survey With reference to 33 issues identified through the indirect stakeholder survey, POSCO E&C directly surveyed internal and external stakeholders to calculate the level of their interest on these issues. Interviews with executives and employees were also implemented. • Identification of material issues related to • Assessment of the interest level and • Decision of key sustainability management status of each issue reporting issues Survey l A total of 6,618 internal and external stakeholders partici- Period: June 17, 2013 ~ June 25, 2013 pated in the survey, through which we were able to understand the Method: Online survey Step 1. Indirect Stakeholder Survey level of their interest in our company’s material sustainability issues. Target: Executives and employees, external stakeholders POSCO E&C conducted the analysis on global standards for sustainability management such as the reporting guidelines of GRI and indices required by DJSI, benchmarking of leading global companies, media research, and reviews on internal management status. Step 3. Selection of Key Issues Gathering and prioritizing data created through this process was followed and, as a result, a total of 33 material issues were identified. We analyzed 33 material issues in terms of the level of interest and effect from the point of internal and external stakeholder views by using the matrix method. As a result, a total of 17 key issues were selected and we reported our responses and performances [ Issues Classification Process ] related to them through this report. [ Key Issues for POSCO E&C’s Sustainability Management ] Media research Collection of Analysis on and analysis Classification and sustainability ① Ethics Management ⑪ Strategy and Policy for GRI G3.1 guidelines Benchmarking on internal prioritization of management ❶ ② Risk Management System Sustainability Management and DJSI indices management issues 16 11 ❼ issues ⑫ status ❷ ③ Social Contribution Activity Energy/Resource-Saving Building ❿ ❸ ④ Customer-centered ❹ Management ⑬ Corporate Governance Policy ❺ and Operation 14 ❻ ⑤ HR Development ⑥ Creation and Distribution of ⑭ Protection of Human Rights Analysis on Global Standards and Benchmarking l POSCO 13 ❽ Material Issues ❾ Economic Value ⑮ Use of Eco-Friendly Materials 12 E&C examined the direction for its sustainable growth by Classification Details 15 ⑦ Wastewater/Waste Control ⑯ Greenhouse Gas Emissions 17 Key Issues Control analyzing global standards for sustainability management Sales increase, product differentiation, risk management, ⑧ Employee Welfare Benefit ⑰ Economic credit-rating, corporate vision and strategy, and financial Material Issues ⑨ Diversity of Employees Expansion of Business Partners’ including the GRI G3.1 Guidelines. In addition, benchmarking CSR Activities soundness of External of Interest Stakeholders Level Potential Issues ⑩ Stakeholder Management and of leading construction companies proceeded to understand Response Securing eco-friendly technology, protection of biodiversity, Environmental Major Issues Level of Effect on POSCO E&C issues directly affecting the construction industry, through eco-friendly construction, and eco-friendly materials which POSCO E&C was able to determine sustainability issues Family-friendly management, harmony between labor and global construction companies were facing. management, sense of ethics, job creation, HR development, Changes of Major Issues l The level of interest in the protection ness partners in the aspect of global operation. The issue on the Social fair trade, enhancement of safety consciousness, stakeholder engagement, social contribution, customer-centered man- of human rights, use of eco-friendly materials, and greenhouse use of eco-friendly materials arose from increasing stakeholders’ Global Standards: GRI G3.1, ISO 26000, UNGC, DJSI agement gas emissions control increased compared to the previous year interest in environmental friendliness, while greenhouse gas Benchmarking: Companies that entered the DJSI and published Common Provision of customer service and cultivation of technical skills reports in 2012 and the expansion of business partners’ CSR activities uncovered emissions control issue were attributable to the possibility that Details: Sustainability management index and material sustainability issues as a new issue. This change resulted mainly from the expansion of greenhouse gas emissions by the construction industry would for the construction industry our global business and it becomes more important for POSCO be controlled by the government. E&C to protect human rights and manage CSR activities of busi- l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 21 Engin ee ring Pr oc ur eme nt
Panorama of Songdo IBD
Building an Infrastructure for People The green roof system installed on buildings contributes the
and the Environment city to alleviate the heat off the island and in turn, preserves C o n s tru c v ngineering biodiversity and habitats through the rainwater collection. E There are various eco-friendly parks and green spaces in A waste treatment in Songdo IBD is under an eco-friendly
Location: Songdo-dong, Yeonsu-gu, ti o n Songdo IBD that help to reduce carbon dioxide within the method. Wastes from an apartment and an office building We build a sustainable city with more Incheon, Korea Beginning: March 2002 city. Sustainability in the aspect of water resource has been a transferred to waste collection plants in each district and wasted advanced engineering technologies. Completion: August 2020 (E) main consideration for parks and green spaces construction. heat is recycled for building operations. The waste recycling rate Ordered by: New Songdo International City Development, LLC As we minimize water intensive vegetation in a park and in Songdo IBD reaches an impressive 76.3%. Therefore, the city green space construction plan, water consumption for is clean and green; there is no foul odor or an eyesore. Moreover, overall landscaping work is reduced. Meanwhile, the seawater the locations where the waste collection plants reside, reduces waterway in the central park plays an important role in greenhouse gas emissions and fossil fuel consumption that Songdo International Business District (IBD) controlling the city temperature and provides residents and normally caused from waste management vehicles. Development Project tourists with places for relaxation. It not only mitigates the heat-island effect but reduces electricity consumption in the The development of sustainable cities requires comprehensive abilities in [ Components of Sustainable City Design ] summer by 10%. As a result, carbon emissions are expected design, engineering, green technologies, and effective communication with to be reduced by 14 thousand tons. diverse stakeholders. Construction of a Sustainable Traffic As a global E&C company, POSCO E&C is taking the lead in developing sus- Network Green Environment through Recycling tainable cities with comprehensive engineering capabilities and a commit- Construction of bike roads ment to fulfilling its social responsibilities. Site Design and placement of public Water Resource transportation Recycling & To preserve water resources in the city, drinking water Green space POSCO E&C has been participating in the International Business District Wastewater Treatment construction and consumption from faucets and sanitary fixtures must be (Songdo IBD) development project, as the key part of the Songdo Interna- consideration of wind Installation of heavy- water system and reduced by 20% to 30% in accordance with the building type. tional City plan, since the joint establishment of NSIC (New Songdo Interna- path, sunshine and scenery rainwater recycling Rainwater storage and heavy-water systems contribute to tional City Development, LLC) with Gale International, a US-based real estate facility Songdo Central Park Sustainability reduce irrigation water up to 90% of the international standard. development company, in 2002. This project is a development of a conven- Components Heavy water is now used for public toilets and cleaning and tion center, an international school, a central park, and living and business Energy Efficiency & will plan to be used for landscaping work in the future. Notably, facilities on the ground space of 5.77 million square meters and is our great Minimization of Carbon Preservation of Emissions Materials & Resources Chadwick International School has been successful in reducing example of a sustainable city we dreamed with our own engineering and Operation of cogeneration Construction waste the water bill by more than 30% via frequent use of heavy- technology. Based on experiences and knowhow from the Songdo IBD de- and automated waste recycling collection facilities Indoor Environment water. velopment project, POSCO E&C continues to strengthen its skills in such proj- Quality In addition, the rainwater recycling facility in the central park ect and develop a packaged construction product to foster the eco-friendly Minimization of use of materials containing is under a consideration of collecting rainwater as much urban development as our top-tier product.. harmful substances as possible and the artificial waterway is filled with purified seawater to save thousands of liters of water on a daily basis. Chadwick International School, Songdo 22 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 23
Health and Safety [ Effects on Songdo IBD by the LEED Certification ] POSCO E&C will continue to take the • Application of energy consumption lead in eco-friendly city development We have minimized the use of harmful materials for build- assessment method by energy simulation The Sharp Green Avenue ings in Songdo IBD. For example, Songdo Convensia, the • More than 20% energy saving by investing the top-notch engineering Energy Saving based on Green Home Construction Period: December 2009 international exhibition center, is equipped with ventilation capabilities. • Drastic reduction of water consumption in to June 2012 facilities, air filters, and shadow walls to minimize internal Reduction non-residential facilities Type: Apartment airborne particles. Materials such as paint, carpet, and wallpa- of Water • 45% reduction in Convensia and 35% No. of Households: 1,014 units Consumption reduction in an international school A. Building Afforestation | By afforesting more per are used with lower Volatile Organic Compound (VOC) Obtained LEED Obtained Certification of Excellence on Eco- than 50% of the rooftop, the heat island ef- Certification friendly Buildings and are located in the North East Asia Trade Tower (NEATT) • Certain amount of air intake and discharge of Prevention fect in the summer will be reduced as well pollutants before move-in to minimize the impact of Sick House Syndrome. Also, earth- of Sick House as the cooling load. • Convensia and an international school, etc. quake resistant design and wind vibration control technol- Syndrome
ogy were applied for skyscrapers. All of these steps were • Carbon dioxide monitoring facilities Improvement taken as a result of our commitment to a healthy and a safe • Frequent fresh air intake of Indoor Air B. Energy Saving | Windows and doors with a high degree of living environment. Freshness air tightness were installed to prevent inflow and outflow of • Use of recycled materials, encouragement in air through cracks. The air tightness of barriers and walls on Better Living Environment with LEED Materials the use of domestic materials residential floors were further improved through the Blower Recycling & Use • Contribution to local economy, minimization Door Test. These methods reduce energy by 15% to 20% com- Certification of Local Materials of environmental effect pared to the existing curtain-wall construction method. • Leisure activity, biodiversity enhancement, POSCO E&C and Gale International promote the Leadership Expansion of esthetic effect C. Execution of Energy Commissioning | Energy use and other in Energy and Environmental Design (LEED) certification in Green Area & • Plan to exceed legal standard by 13.8% for problems in building management were minimized through Open-Space Convensia Songdo IBD development project. the Building Commissioning, which performs energy system check-ups and documentation to meet the requirements of The LEED is an international certification system on eco- building owners. friendly buildings hosted by the U.S. Green Building Improvement of Songdo IBD Value Council (USGBC), a private organization established in 1993. Obtaining the LEED certification requires a high performance [ LEED Certification Status in Songdo IBD ] D. Minimization in the Use of Harmful Substances | in a total of 5 areas-use of sustainable land, efficiency of Project Certification Date Use A comfortable indoor environment was provided to water resources, energy and atmospheric environment, residents, as econ-friendly adhesives, sealants, and carpets Songdo Convensia April 1, 2010 Convention Center materials and resources, and internal environment. Designs are used and the construction is managed in accordance Sheraton Hotel, Incheon Mach 3, 2011 Accommodation and technologies for energy reduction, expansion of green with the indoor air quality control plan established at the Chadwick International School November 10, 2011 Educational Facility beginning of construction. space, minimization of harmful substances, and reduction of water consumption have been applied to buildings in The Sharp Central Park I January 31, 2012 The Sharp Harborview I February 17, 2012 E. Resource Recycling | More than 83% of materials were Songdo IBD, and as a result, 11 buildings have the LEED The Sharp Central Park II Mach 8, 2012 domestically produced and 15.69% were materials certification. In addition, Songdo IBD was selected as an containing recycled components. Use of resources and Songdo IBS Tower April 6, 2012 example for “the Leadership in Energy and Environmental Residential Building environmental effects from material transportation Design for Neighborhood Development (LEED-ND),” which Prugio Harborview May 31, 2012 were also reduced by recycling more than 87% of construction waste. will help us obtain the LEED certification for the entire city. Xi Harborview June 8, 2012 These efforts will provide a better living environment and a The Sharp Harborview II September 7, 2012 great value to Songdo IBD. The Sharp Green Avenue January 16, 2013 F. Biodiversity Protection | By providing open-spaces with 60% larger than the legal standard, the effects on biodiversity from estate development have been minimized. Green Climate Fund (GCF) Secretariat to Songdo
A successful launch of the Songdo IBD with all the knowledge and experiences, successfully invited the Green Climate Fund G. Minimization of Environmental Load | Energy and resource consumption to dump waste from (GCF) secretariat, which is called the “World Bank of the environment”, an UN-affiliated organization, in October 2012 against stiff the building was reduced by utilizing the waste- competition with leading international cities. This success will enable Songdo IBD not only to demonstrate competitiveness and transferring facilities in Songdo International City, value as an eco-friendly city but to play a key role for the global economy and environment. which contributed to minimizing the environmental effects. 24 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 25
Special Page Engin ee ring
Strengthening Engineering Capabilities to Ensure Sustainability POSCO E&C has focused on strengthening its engineering capabilities to develop higher sustainability for buildings and cities. We upgraded our Urban Development Infrastructure Package engineering capabilities through the convergence of diverse technologies, ensuring higher construction quality, and environmental friendliness of POSCO E&C possesses professional manpower and eco-friendly technologies to conduct construction in all areas of urban development projects buildings. In addition, POSCO E&C’s urban development infrastructure package has become a unique development of a sustainable city. Through including roads, transportation, electricity, water, and waste disposal as well as planning, design, construction, and operation & maintenance for buildings. Pr oc ur eme nt reinforcing engineering capabilities, POSCO E&C is committed to improving the sustainability of the company, economy, and environment. By capitalizing on experiences and knowhow from the Songdo IBD, the Esiapolis (Daegu, Korea) and the North An Khanh (Vietnam) projects, POSCO E&C continues to develop packaged infrastructure products to provide customized cities with various optional features. The company is also striving to develop carbon emission-free cities by 2020 through the LEED certified technologies, new renewable energy, BIM-based energy analysis and microgrids. Building Information Modeling By constantly upgrading engineering capabilities, we will promote the eco-friendly urban development project as our top-tier product.
To raise the quality of construction and minimize energy consumption, [ Expected Effect by Applying the BIM Method ] POSCO E&C utilize the Building Information Modeling (BIM) method. The Problems in Check-up of omissions POSCO E&C’s Urban Development Infrastructure Package BIM method is a 3-D design technique beyond any existing design to short- cooperation Prevention and duplications on C o n s tru c en the construction period and minimizes energy consumption of build- of error on blueprints blueprints ings. This method has been applied to our office building, Art Center, and Check-up of differences
between blueprints ti o n Tri-bowl in Songdo IBD and dozens of building projects in other regions. By Error occurrence on blueprints Interference between Traffic Electricity Water Waste creating a digital mockup prior to the construction phase, we are able to Verification of constructions • Harbor technology • Onshore wind power technology • Seawater desalination technology analyze construction-related issues beforehand and make quality improve- interference in Interference among • City waste derived fuel • Advanced sewage treatment/ construction construction/machine/ • Light rail transit system • Cogeneration system ments. Frequent design • Waste collection piping system electricity • Concrete composite bridge • Fuel cell generation reuse technology modification In turn, POSCO E&C has been awarded the BIM Awards Best Practice in 2010 technology • Wastewater treatment Building SPEC check-up technology in raining and BIM Awards Excellence in 2011 by buildingSMART Korea, and followed Information Modeling by the Grand Prize, Best Work and Professor Awards at the 2012 International Interference in Engineering Suggestion for con- BIM & Safety Competition. In 2013, the company published a casebook en- construction consultation struction improvement Application of Independent Urban Development Infrastructure titled “BIM in Practice” containing the basics of the BIM method, BIM-applied Regulations check-up projects of POSCO E&C, and convergence technologies between construc- Comparison with Reconstruction tion and IT and their applications for the first time in the domestic construc- model house
tion industry. This casebook is expected to be useful as a reference for aca- Realization of Construction delay • Construction of the POSCO demia and public institutions as well as the construction industry. POSCO virtual reality check-up Green Building • Operation of city business management system Construction • Enhancement of global network • Reflection of locally optimized design technology E&C plans to expand the BIM method to construction and maintenance Suggestion on design delay improvement • Selection of target nations and • Application of city carbon emissions evaluation technology as well as design. In addition, the company will improve the productivity in establishment of DB • Modular products for underdeveloped countries • BIM-based energy analysis construction by proactively utilizing sophisticated IT technologies. • CEMS-based city atmosphere analysis 100 • Operation of integrated city maintenance & control system • Integrated new renewable • Application of integrated design specialized in city power generation system CO2 10% Reduction in City • Operation of integrated city O&M system • Microgrid (Smart Transmission and Distribution System) CO2 30% Reduction in City 50
CO2 50% Reduction in City
CO2 100% Reduction in City
0 2013 2014 2015 2020
BIM Design of POSCO E&C’s Office Building in Songdo Actual Construction *CEMS: City Energy Management System l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 27
Setting Up Fair Trade Relationship and Preventing Corruptions through Ethics Management Engin ee ring
Construction businesses face a lot of critical issues due to the participation of various stakeholders. The absence of a proper decision making and norms may have a negative effect on the business due to unethical behavior such as an unfair trade. Our employees at the Brazil CSP project site prevent potential risks according to the guidelines of the FCPA (Foreign Corrupt Practice Act) to fight local corruption. They also participate in the pledge for practicing ethics and are educated on case studies through real-time video conferences to reinforce their ethics. POSCO E&C will make its best effort to manage ethical risks for the Brazil CSP project by promoting global-level ethics management and fair trade relationships. Pr oc ur eme nt
Sharing Experiences from Global Business with Domestic Partners and Supporting Their Entrance into Brazil
The entrance into new overseas markets often repeats trial
and error due to various changes in business environments C o n s tru c rocurement such as different languages, laws, and culture. POSCO E&C has P been supporting domestic business partners who is doing
Location: Ceara, Brazil ti o n business in Brazil and helps to adapt to the local business POSCO E&C operates a sustainable procurement Beginning: July 2012 system for Win-Win growth with stakeholders. Completion: August 2015 environment. We have shared our knowhow in entering Ordered by: CSP the Brazilian market including labor laws, employment, importing processes, equipment operation, the tax system, HSE regulations, and labor management in the region to Education to Support the Localization of Business Partners help them to reduce the potential risks the firm may face.
CSP Integrated Steel Plant Project in Brazil [ Education Courses to Support Business Partners ] POSCO E&C is constructing an integrated steel plant for CSP (Companhia [ Components of Sustainable Procurement ]
Siderugica do Pecem/Pecem Steel Company) in Brazil, a joint venture of Education Course Contents Workforce Materials Equipment Technologies Vale, the largest iron ore supplier in Brazil, Dongkuk Steel and POSCO. Direct Invoicing Explanation on direct invoicing process The USD 4.34 billion (approximately KRW 5 trillion) Brazil CSP integrated Procedure for importation in Brazil Explanation on matters to be attended to import clearance steel plant project (Brazil CSP project) produces three million tons of steel in NR and Equipment Entrance Explanation on NR and equipment-carrying procedures the Pecem Industrial Complex in Ceara, Brazil. This is the second largest single steel plant that won from the overseas Insurance Explanation on insurance-related facts market among Korean E&C companies and will play a major role for the Labor Explanation on Brazilian labor laws economic growth of Brazil. We are operating a sustainable procurement Subcontracting Procedure Explanation on the compliance with subcontracting procedures Business Employees Local Environment Partners Communities system for this project by fairly trading resources such as workforce, Explanation on HSE regulations materials, equipment, and technologies, as well as being proactive in labor- HSE Preparation of carrying vehicles, machinery, and equipment: Required procedures and documents Sharing feedback from construction and accident cases management relations, Win-Win growth, and social contribution activities Practice of Ethics Management for local communities. Prevention of Corruption Brazilian Association of Technical Standards (ABNT) Introduction of ABNT components and important details Brazilian National Regulations (NR) Introduction of NR components and important details Our sustainable procurement system offers opportunities for local business Development of Respond to Win-Win Growth Job Creation partners to participate in the project and contribute to job creation through Local Communities Climate Change Labor Management Understanding of labor management and details of collective agreement local employment. POSCO E&C will continue to operate a sustainable Support to Domestic Employment of Promotion of Social Use of Eco-friendly On-site Access-related Explanation of on-site access-related matters Partners Local People Contribution Activities Materials procurement system for Win-Win growth with various stakeholders Procuracy of Direct Importation Explanation on differences of and matters to be attended to direct importance including employees, business partners, and local communities. Development of Maintenance of Local Partners Stabilized Labor- Construction-related Taxes Explanation on construction-related taxes Management Relations Introduction of other companies’ entrance into Brazil Experience in Brazil Provision of guidebooks in relation to business in Brazil 28 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 29
and saving each type of material to effectively use these Engin ee ring Publication and Distribution of Guidelines for Business in Brazil materials and prevent damage to them. In particular, the company designates storage areas from the time the materials POSCO E&C has developed guidelines for each business activity to help business partners who are newcomers into Brazil minimize are brought to the site and continuously stockpiles them difficulties during their local businesses. The guidelines include incorporation process, taxes, procurement, transportation/customs clearance, visa issuance process, local business conditions, and major HSE legislation. The guidelines are published as a pamphlet and throughout the project, which helps in preventing damage provided to business partners. to the materials and enhancing efficiency by using the first- in/ first-out method. The location and amount of materials are Main Contents of Guidelines marked at the entrance of the storage facilities and therefore
Overview of Brazil and project status prevents confusion and minimizes the time needed to collect Pr oc ur eme nt Process in establishing local corporations certain items. Tax-related matters and notes Transportation/customs clearance Slag Concrete Use for the Brazil CSP Project (as of May 2013) Visa issuance process
Local business conditions and HSE slogan Deposited Remaining Procurement Project Site where Slag Concrete is Used 10,000㎥ (30Mpa) Guidelines for Business in Brazil C o n s tru c 490,000㎥ (30Mpa) Responding to Climate Change by Procuring Total 500,000㎥ Promoting Cooperation with Local Business preliminary business partners in order to introduce the details Eco-friendly Materials Locally (Based on 30 Mpa basis) ti o n Partners to Set Up a Sustainable Supply Chain of our mutual cooperation programs. Local business partners, *Mpa (Mega Pascal): Unit of measuring chosen through these processes, are supplying various POSCO E&C considers the environmental friendliness of strength of concrete According to our business expansion in South America, materials, equipment, and services to POSCO E&C. construction materials. As for the Brazil CSP project, slag setting up a supply chain in the region has become essential With the awareness that business partners’ capabilities play concrete is procured locally to reduce the use of cement, for our sustainability. an essential role with our construction quality and time frame, which is the major material of concrete. Slag concrete is Slag Concrete To this end, we are forming a pool comprised of local business POSCO E&C is promoting mutual cooperation activities. The eco-friendly as it is made from slag, a byproduct from steel partners. To select excellent partners, we held a conference to company analyzes the productivity of workers in Brazil and mills, and produces less carbon than cement. Therefore, Generation Process of Blast Furnace Slag present our strategic directions for mutual cooperation and Korea, and provides local business partners with knowhow to the Brazil CSP project is expected to reduce cement and procurement policies and processes to 200 companies which prevent accidents and improve productivity of priority control greenhouse gas emissions by 55,680 tons and 50,112 tons, Air Cooling Slag Crushing Crushed Aggregate are engaging in the construction business in Fortaleza and processes such as reinforcing iron bindings, concreting, respectively. Granulated Slag Ceara. Since then, an information exchange was held for 134 molding installation, and pile cutting. Cement Material, Fine 100 % Aggregate Minimizing Resource Consumption by Iron Ore Material Materials Management Plan Cokes Recycling Limestone No Waste Damage to materials can result in the consumption of new resources. POSCO E&C has mechanisms for managing storage
INTERVIEW The Brazil CSP project has been a significant achievement for Seil-Engineering, through which we have been provided with various support and cooperation from POSCO E&C. POSCO E&C has not only Presentation on Mutual Cooperation Information Exchange provided subcontractors who are unfamiliar to overseas business with information on incorporation, tax and accounting, and equipment, but shared the Know-Where of local workforces through various channels, which has enabled us to rapidly adapt ourselves to new circumstances. In particular, the guidelines for business in Brazil really helped subcontractors to prevent various risks such as law-related problems and conduct local projects smoothly. In addition, Seil Engineering understood POSCO E&C’s commitment to promoting Win-Win growth through the Brazil CSP project. We expect POSCO E&C to continue to support subcontractors who lack offices and experience in overseas business, so that they can continuously expand their business and prevent mistakes. We also hope Win-Win growth with business partners will help continue sustainably.
Transferring Knowhow – Molding Installation Transferring Knowhow – Pile Cutting Kim, Jeong-Yoon / Head of Seil Engineering Corporation, Brazil 30 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 31
Local Job Creation through Amicable Labor- Operation of Organizations to Manage Labor- Opening a Multimedia Room in Brazil Engin ee ring Management Relations Management Relations at the Brazil CSP project site POSCO E&C dispatched a HR team to the Brazil CSP POSCO E&C has employed 219 local people in Brazil, contrib- project site and arranged for labor-management relations uting to job creation in the region. The company introduces controllers at each construction site to strengthen labor- POSCO E&C and Korean culture to the local employees and management relationship. In addition, locally hired labor conducts Thanks-Sharing activities with local people once a lawyers, accountants and HR managers are contributing month in order to reduce the cultural gap. Local employees to operating a labor-management system suitable for
are also provided with a variety of welfare benefit programs the region. The Labor Committee, a group representing Pr oc ur eme nt such as commute buses, food, lodging, livelihood assistance, local employees, is held weekly to comply with the and health and life insurance. For the stabilization of labor- collective agreement and improve working conditions. management relations satisfying local culture and legisla- In particular, education and presentations on local labor tion, we employed local experts to deal with labor problems laws, collective agreements, and labor management are legally. Employee complaints and grievances are sent to the offered to subcontractors for the improvement of their Labor Committee through responsible managers at each labor management capabilities and prevention of labor
construction site. conflicts. A coordinated response is conducted in order to C o n s tru c prevent and resolve labor conflicts. Number of Employees at POSCO E&C Brazil Corporation ti o n and the CSP project site (as of May 2013) (Unit: persons) Operation of the Labor Committee at the Brazil CSP project site The employees of the Brazil CSP project site belong to Presentation for Cultural Exchange Experience of Korean Traditional Culture 129 SINTEPAV-CE (Ceara Heavy Construction Labor Union), Korean which is a labor union for the region and industry, and there is no special labor union at the site. In case of collective 219 bargaining, SINTEPAV-CE directly carries out negotiations Brazilian Contributing to the Development of Local Communities and Exchanging with the management group at the Brazil CSP project site Culture through Social Contribution Total 348 and the other agreements are performed by the Labor Committee. The Labor Committee consists of 6 members Communication with Local Communities according to the Collective Agreement Act and currently POSCO E&C and CSP investigate the complaints of local people and find solutions to establish a basis for Win-Win growth. 3 members are working actively for the Committee. The The company also invites members of the local government to hold discussions. To respond to various social conflicts, we Labor Committee collects complaints and problems from continuously collect public opinions through a research group who were consisted of students in the local universities. employees at the site and strives to reach a resolution Collected opinions through various channels are utilized for activities to resolve local problems and improve social contribution through regular meetings with the company once a week. activities.
Nurturing Human Resources and Spreading Korean Culture Together with the Ministry of Culture, Sports, and Tourism, POSCO E&C donated multimedia equipment including computers and projectors to an elementary school and a middle school in Ceara where the Brazil CSP project site is located to help local students receive a quality education. We also plan to donate welding machines to a welding school which is operated by the union of the Brazil CSP project site for the purpose of nurturing professional human resources and supporting local students to find jobs. Moreover, an event to introduce Korean traditional play, dance, history, and food was held, in which about 300 students and their parents participated.
On-Site Health Check-up Event l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 33
Complying with Laws is the First Step for Preemptively Preventing Safety and Engin ee ring Building up a Trust with Stakeholder. Environment Risks at Construction Sites
POSCO E&C is committed to complying with local laws and Our business sets out with the principle that any accident can be strives to understand the local environment and culture. prevented. We implement risk evaluation to preemptively prevent At the Campiche coal-fired power plant site in Chile, we have safety risk, through which we identify risk factors and take action. complied with local laws on safety, environment, and health based on POSCO E&C’s unique HSE management system.
Prior to the construction, local laws related to safety, environ- Pr oc ur eme nt ment, and health had been reviewed through analysis on our previous projects in Chile. Collected data was then uti- lized to formulate a complete management mechanism. We also monitored the amendment of laws and applied them to our management activities during the project. POSCO E&C maintained an amicable relationship with local
institutions by proactively responding to requirements from C o n s tru c onstruction the Ministry of Labor and occupational health and safety HSE Check-up Meeting C insurance companies in Chile. The Project HSE management
Location: Puchuncavi, Chile ti o n system was also established and applied to the project site Risk evaluation is carried out by an initial, monthly, and annual We practice sustainable construction considering safety, Beginning: May 2008 environment, health, and quality Completion: March 2013 in order to satisfy the client’s contractual requirements and basis. We identified the risk factors of major works at the site Ordered by: EEC of AES Gener HSE regulations based on the OSHA Code (U.S. Occupational before the construction through the initial evaluation. Health and Safety Code). Since then, the frequency and intensity of risk factors have been quantified on a monthly and annual basis. Critical risks le Con Chi tra have been classified and intensively managed through regular in ct s ua aw l R L e d q measures. te u a ir l e e r m We have also analyzed and evaluated environmental Campiche Coal-fired Power Plant Projcet in Chile - E e S n t H elements such as noise and water and air quality, as well as Campiche Project HSE Construction is a process that consists of the building or assembling of [ Components for Sustainable Construction ] Management System social and economic elements such as culture, awareness, infrastructure. Far from being a single activity, large scale construction is a e and employment which can affect regions around the M d Construction in Full Consideration of Safety, Environment, Health, and Quality a i P n O u feat of human multitasking and, in turn, causes risks. Risks in construction a G g S E site. By complying with the results of the environmental e C S m O H e E ) occur in accidents, damage to eco-systems, hygiene-related problems. As of n &C HA effect evaluation, we strive to minimize any impact on local t S OS ys ES ( the result, they may increase complaints from local communities and lose tem A communities. loyal customers. Ensuring em- Environmental Improvement Securing Based on our corporate philosophy of respecting humanity, POSCO E&C ployee safety protection of employees’ quality health set up a world-class safety, environment, health, and quality management system to prevent such risks in advance. The Campiche coal-fired power plant in Chile, completed by POSCO E&C in March 2012, was conducted as a turnkey-based project encompassing HSE Management System for the design, procurement, and construction (EPC). Realizing safe Campiche Coal-fired Extending For achieving excellent performances in this project by practicing construction sites Power Plant product life cycle Project in Chile sustainable management activities such as compliance with local legislation, risk management, environmental protection, and quality control,
POSCO E&C was highly recognized as an EPC specialty company for global Preemptively Preventing Building healthy work power plant projects by the client. environmental pollution conditions
On-site Safety Training 34 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 35
Preventing Environmental Pollution and maintained thorough preparations to prevent any environ- Engin ee ring Creating a Healthy Work Environment mental accidents. To create a healthy work environment, the company checked Water was sprayed six times a day on the Campiche coal-fired the cleanliness of prefab restrooms and washing facilities on power plant site to prevent scattered dust and waste was clas- the site every day and the hygiene of restaurants regularly. sified and treated as general, industrial, and designated waste In commemoration of Earth Day, a competition was held to according to the local law. publicly express ideas on the improvement of the environ- In addition, the conditions of sorting-out, arranging, and man- ment at the site and surrounding areas from workers.
aging waste were checked every day to maintain a clean site. Through the competition, we promoted an environmental Pr oc ur eme nt In particular, dangerous substances such as waste oils and campaign with a poster which read, “We need to protect our paints were kept in a designated area, and a daily check was globe with our hands” and other various activities to improve conducted for the use of protective equipment and counter- the environment at the site. measures against leakage. Through these efforts, the company
Countermeasures against Pollutants 6 Million Man-hours of Zero-Accident Celebration C o n s tru c Classification Cause of Pollutants Countermeasures
Approval needs to be acquired one day before working at
Light Use of lights when working at night ti o n Zero-Accident Site Made by Interest and Operation of Area Ownership Program and Prompt night and the plan to use lights must be checked beforehand. Improvement System Effort from All Stakeholders Walls for preventing noise must be installed and noise must Noise and vibration Noise and vibration due to operation of facilities The Area Ownership Program was operated to strengthen be checked each month. At POSCO E&C, we are committed to building safe and the safety activities of all workers at the Campiche coal- Fine dust Generation of dust due to civil engineering work Water spraying tankers must be operated six times a day. healthy workplaces. All workers of the Campiche coal-fired fired power plant site, promoting their safety awareness Dangerous substances must be stored at a designated area Discharge of dangerous Use and disposal of dangerous substances like oils and power plant site have received regular training on safety and and minimizing safety dead zones. All workers at the site before being discharged; they must be handled by firms substances special chemicals required for work every month we have awarded prizes to the best workers conducted safety checks in their allotted areas every day and specializing in their disposal. who contributed to on-site safety activities or served as a reported unsafe acts and conditions to the cooperating firm Pollution of soil and Inadequate discharge of water for working and Wastewater must be treated by specializing firms or purified good example of complying with the safety regulations. Prize so that immediate action might be taken. The results of the underground water wastewater by water treatment facilities. winners were given movie tickets, meal tickets, and other gift actions were also reported and confirmed. Efforts were also Equipment must be checked regularly and emergency Leakage of oils and dangerous substances from marine certificates to enjoy with their family members. This event made to quickly remove any danger which might threaten Marine pollution equipment including cloths for absorbing leaked oils must equipment gave us opportunities to promote POSCO E&C’s safe and the safety of workers at the site. be secured to prevent marine pollution. healthy culture to local communities. When unsafe conditions and acts were found, the relevant Pollution by soiled car wheels of concrete pump cars and Facilities to clean car wheels must be set and operated at the Road pollution When one million man-hours of zero-accident was work was immediately stopped, and then training on safety other cars carrying materials entrance to the site. accomplished, the best workers were awarded gifts so as to related regulations were conducted for more than one hour encourage them to actively participate in our zero-accident on that day. The work could only be resumed after taking movement and enhance their safety awareness. actions on the risk and confirming the correction at the site. The Campiche coal-fired power plant site was highly praised by the client for the workers’ endeavors to comply with the international environmental safety management system (Global HSE Management System), local regulations, and various safety activities. In particular, this site boasted the best 1st Area zero-accident performance among POSCO E&C’s overseas 2nd Area construction sites by achieving 6.5 million man-hours of 4th Area zero major disasters and zero-accidents, like death. It was 3rd Area recognized as the safest construction site among client’s sites as well, and served as an example and benchmark for other companies. 5th Area
Area Ownership Walls for Preventing Noise 36 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 37 Engin ee ring
INTERVIEW Pr oc ur eme nt
Verification of the Quality of Boilers C o n s tru c
Enhancing Sustainability in Operation and Improving Sustainability in the Construction Mario Angelo Lopez Vergara
AES Environmental Safety and Health Manager ti o n Maintenance of Facilities through Quality through Continuous Monitoring Management The Campiche coal-fired power plant project has achieved POSCO E&C figures out client needs and manages the quality goals such as keeping with the project schedule quality of sales, design, procurement, construction, and after- and minimizing the defective welding rate by continuously Our construction site was able to achieve 6.5 million man-hours zero- sales service in accordance with the quality management monitoring and improving business processes and products. accident record thanks to the cooperation and efforts of POSCO E&C. system that meets the global standard. The company is An increase in the defective welding rate could potentially committed to providing clients with the best quality, which cause serious problems such as delays in construction and contributes to preventing additional maintenance costs and an increase in costs. However, this site has selected and man- We really appreciate POSCO E&C for its cooperation in the sustainable management issues of material use caused by quality problems and enhancing the aged “maintenance of the defective welding rate at less than the project site regarding safety, environment and health. sustainability in operation and maintenance of facilities. For 5%” as a critical quality management item in order to achieve the Campiche coal-fired power plant project, a total of 809 high quality welding. The 100% RT (Radiographic Test) was AES believes that our company and POSCO E&C have built a mutual trust and strived to realize a sustainable quality improvement activities have been promoted in the conducted for high-pressure parts of the boiler components society in Chile through three projects. In particular, our efforts to reduce an environmental impact at the fields of civil engineering, architecture, machinery, electricity, to secure the soundness of welding, and quality inspectors Campiche coal-fired power plant site enabled us to establish a deep trust with the local communities. and instruments. Inadequate quality matters found during intensified their monitoring activities during welding work. the quality management process have been removed by The welding rod to be given to the welder was released in With the top priority of the environment and safety, AES is practicing the slogan of “Doing it right is doing it recording their causes concretely. Project managers at the site the presence of the construction manager or quality man- safely.” We suspended work whenever we found unsafe situations or could not be sure of safety. This is our have taken actions to correct inadequate quality matters and ager only after being kept at a normal temperature in a dry dedication to safety and preventing accidents. We really appreciate POSCO E&C for its efforts to understand these corrections have been finalized after confirmation by oven until the release. This measure contributed to prevent- the first and foremost value of AES despite so many difficulties in the project such as construction costs and quality managers. In this way, the results of monitoring and ing poor construction due to the use of inferior welding duration, and responsibilities. analyzing problems in design, production, and construction rods. The welder who made the same defect in welding It has been difficult for AES to achieve world-class safety performances, even though it has a system, scheme, have been created as a database so that immediate actions more than two times was changed with another to prevent could be taken against the same problems in other projects. the same problem. and process for safety. However, we were able to realize our goal for safety on the three projects collaborated with POSCO E&C. I think it was possible thanks to understanding POSCO E&C’s policies and values for sustain- Status of Quality Improvement Activities (unit: cases) Status of Defective Welding Rate ability management and being thorough about safety for three years. Architec- Elec- Ma- Planning and Number of defective Classification Civil I&C Total Defective rate ture tricity chine completion of welding welding Once again, we express our appreciation to POSCO E&C for its efforts to consolidate the foundation of a Design 9 4 13 117 11 154 11,926 places 210 cases 1.8 % zero-accident project so that AES was able to attain a world-class safety level. Procurement 12 2 21 112 22 169 Construction 79 65 45 273 24 486 Total 100 71 79 502 57 809 *I&C: Informarion & Communication 38 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 39
HARMONIZATION OF PROFIT & GROWTH
R&D Investment QA Specialist Cost Reduction
KRW 60.8 billion 21 persons KRW 365.7billion
Development of Future Core Technology 40 Reinforcement of Global Quality Management 44 Constant Management Innovation and Profitability Enhancement 46
POSCO E&C’s Songdo Office Building in Incheon 40 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 41
DEVELOPMENT OF FUTURE CORE REINFORCEMENT OF GLOBAL Constant Management Innovation TECHNOLOGY QUALITY MANAGEMENT and Profitability Enhancement
[ R&D Management System ]
Laying the Foundation to Become a Major Performances in 2012 DEVELOPMENT OF FUTURE Global Technology Leader by 2020
CORE TECHNOLOGY R&D investment Maximizing the Reduction of Project Costs by Developing Future Core Technology KRW 60.8 billion
Securing technology ▲ Strengthening supports ▲ Reinforcing global ▲ Key Issue Major Activities Future Plans for future core businesses for projects to reduce costs R&D capabilities Certification of new 01 in 2012 02 03 environmental and green technology 8 cases (From 2012 to June 2013) • Expanding technology development • Expanding integrated technical sup- • Enhancing technical cooperation • Developing new technology • Securing technology for future core • Expanding technology development for core products of PEPCOM by 2020 ports for projects with overseas partners • Reducing cost businesses for PEPCOM core products • Enhancing engineering technology • Reinforcing supports for project sites • Promoting technical supports for • Nurturing global business • Strengthening supports for cost • Expanding technical supports for capabilities through technology value engineering overseas partners capabilities reduction of projects project integration • Increasing cooperation for technol- • Promoting certification of new and • Cultivating global R&D specialists R&D specialist • Expanding global R&D capabilities • Enhancing technical cooperation ogy development with the POSCO green technology and applying them persons with overseas partners 84 Family to project sites
Challenges to new markets and profitable growth are important Fortification of Engineering Capabilities Technical Supports for Projects [ Technology Innovation Process ] factors for the sustainability of a company. Innovation and im- POSCO E&C is dedicated to fortifying technology and engineer- Innovation Support R&D Center Project Site provements through R&D are also crucial for a company to secure ing capabilities for future core products. The Basic-Engineering To solve technical problems at project sites, we have an Archi- Organization new business opportunities and reduce costs. POSCO E&C will Capability Promotion Taskforce was set up to boost engineering tecture Engineering/Civil & Environment/Plant/Energy Research evolve into a global technology leader by 2020 by focusing on capabilities and, in the future, the Integrated Engineering Center Group and a Technical Advice Group in the R&D Center. Our ma- Review of securing new technology for future growth and better corporate Review of risks blueprints and Benchmarking will be operated to ensure an independent engineering imple- jor technical knowhow includes the application of newly devel- at project sites construction of example sites value and fortifying global R&D capabilities. mentation system. oped methods to project sites, identification of risks at project methods sites, value engineering (VE) of general methods, and blueprint Securing Technology for Future Core Businesses [ Roadmap to Fortify Engineering Capabilities ] reviews, for which cutting-edge measuring equipment and up- Identification of cost reduction Technical support
to-date interpretation techniques are used. These activities con- Engineering Value Technology possibilities Addition of taskforces Development of Technology for Future Core Products tribute to reducing costs, shortening the construction period, and - Offshore (wind power/port) Operation of the Inte- To achieve the strategic goal of “2020 PEPCOM,” POSCO E&C es- Railroads (light rail transit/high-speed railroad) grated Engineering Center upgrading quality at projects sites. Cost reduction Shortening construction period tablished a roadmap for the integration of E&C businesses and has been systematically securing technology for future core prod- 2012 2013 2014 2015 ucts in accordance with the roadmap. The competitiveness of our business portfolio is also being strengthened by expanding tech- Operation of 5 taskforces Expansion of taskforces Green Building Project by New Technology nical cooperation for future core products in the areas of steel, en- - Coal gas / water / smart nuclear reactor / - Long tunnel / large space / Steel materials Architecture Machinery Electricity ultra long-span bridge / skyscraper modular ergy, civil, environment, and architecture with the POSCO Family. POSCO E&C and the POSCO Family have been promoting a green 24 technologies 29 technologies 29 technologies 29 technologies building project since 2010. This building has offices on a basement including including eco- including intelligent including home rainfall-using friendly concrete heating control network Expansion of R&D Capabilities level as well as 4 floors above ground, apartments on 3 additional system technology technology technology floors above ground, and an assembly-type modular structure. Area Technology for Core Products Through this project, we have secured more than 110 eco-friendly We are reinforcing cooperation with POSTECH Graduate School Steel FINEX-CEM, DRI-Minimill energy technologies, including solar energy, geothermal energy, of Engineering Mastership in order to secure technology for new Coal-fired power, SNG, offshore wind power, smart nuclear and rainwater recycling for the operation of the building. The safety Energy growth engine businesses and to develop R&D capabilities. Joint reactor of the building has been enhanced by applying earthquake-proof research is also being conducted through technical cooperation Long-span bridge, long tunnel, light rail transit, high-speed steel developed by POSCO. In addition, we introduced modular Civil railroad with overseas advanced construction companies. Next-genera- architectural technology to assemble the structure at the site which Environment Seawater desalination, advanced water treatment tion steel technology and zero-energy building models are be- was fully manufactured in the factory with green concrete technol- ing developed through the collaboration with the POSCO Family. ogy to reduce CO emissions by recycling blast furnace slag, a steel Skyscraper, eco-friendly house, large space construction, 2 Architecture modular construction Thusly, we are striving to maximize the synergy in R&D by cooper- byproduct. This project will be completed in 2013. Bird’s-eye View of Green Buildings ating with the industry, academia, and research institutes. 42 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 43
Status of Development of Major Technologies by POSCO E&C Completed In progress
Applied Status of re- Technology name Outline Characteristics Competitiveness Applied case Intellectual property rights Remarks product search progress
Steel
Model of Furnace for Securing the basis technology for heating furnace design through CFD interpretation by Securing technological competitiveness beyond dependence on foreign Union Steel CGL, Taiwan’s Securing cost competitiveness through own design Continuous Galvaniz- section within a vertical furnace, systematic analysis of temperature distribution companies’ technologies, competitiveness in the luxury steel sheet Prosperity CGL, Turkey’s Assan Patent registration no. 474816 (80.7%, compared to outsourcing). ing Line Developing CGL furnace’s dynamic furnace control system. market for interior and exterior steel sheet of cars. CGL, Mexico’s CGL EP PJT, etc. CGL Process Design of Pre- Since the grinding brush roll, oscillation system, edge wiper, and electrolytic cleaning system fa- Increase in directional electric Technology automatically controlled to various strip widths to produce Cleaning Section for cilities for CGL depend on the import of foreign companies’ designs and facilities, the price and Enhancing maintenance and production cost with the extension of steel sheet capability, Gwangyang high- quality plated steel sheet with excellent operation and mainte- Patent registration no. 111502 Continuous Galvaniz- dependence on overseas technologies are high. Thus, we have secured the design technology the brush roll’s replacement cycle. No. 2 CGK rationalization remodel- nance. ing Line for each facility process through the reverse engineering of foreign capital-funded facilities. ing, Mexico CGL project, etc.
Process Design of Skin Developing SPM & TL facility with our own design technology, improved tension leveler roll Pohang STS #2 SPM, Mexico SPM/ Sharply reducing the process time by enabling the use of leveler unit Pass Mill & Tension exchange device, SPM roll exchange device, minimization technology at the micro rolling Saving on engineering expenses with own design. CGL SPM & TL, Taiwan PGL SPM Patent registration no. 273102 TL other than the unit concerned in replacing the roll. Model of dynamic furnace Leveller section, and SPM PLC of multi-division type. & TL, etc. vertical control
Civil Engineering Expecting more than 10% economic effects compared to the Connecting and supporting the rail and support slab using polycork -- instead of the rail existing one; road use rate has increased by sharing roads with Cast-in-lace rail track Light rail connecting device used for the existing railway -- enable the reduction of vibration and Rail track can be finished in various ways, such as concrete, asphalt, pedestrians and other public transportation means. Rail car base construction for Patent registration no. 10-1232896 system using PURail- transit noise. Another advantage is that the railway surface can be shared with existing transporta- stones, and grass. With various top part finishing forms, a beautiful city view has Donghae Nambu Line (T/K) transportation new technology no. 13 strip and Polycork tion and pedestrians by matching the top part of the rail with the finishing ground surface. been secured, with noise and vibration reduced by more than 5% compared to the existing one. Anchor construction This technology is an anchor construction method for flimsy ground made by attaching steel Maximizing frictional force with the wing’s wedge state and expanded Saving on construction cost with the reduction of bonded length Civil method (wing anchor wing in wedge form at the anchor fore-end part. The reduction of the number of anchors and New construction technology no. 652 Engineering bulbs, drawing resistance improved by about 50% compared to the and number of anchors, improving economic efficiency; cutting Applying to Songdo Master construction method) bonded length resulted in about 30% cost savings compared to the existing construction method. new railway technology no. 2009-0027 & existing construction method; with tensile loss minimization, subsidence construction cost by 25% compared to the existing construction View site (about 3,500 holes) for flimsy ground us- As an anchor construction method for flimsy ground that expanded the wing, this technology has Patent registration no. 10-1072525 Construction and crack at the rear part are controlled. method. ing extended wings increased drawing resistance with compound resistance by tensile-expanded bulbs and packers.
Commercialization 2 Anchor for flimsy ground For domestic commercialization of 4,400kg/cm yield stress, ultra-high-strength steel pile Reducing CO emissions by reducing steel materials compared to Gwangyang SNG Plant con- Foundation technology of ultra- Replacing the existing general steel pipe pile with POSCO-developed, 2 developed by POSCO, existing steel pile replacement and cost savings are promoted with the existing construction method with the decrease in pile diam- struction, Gwangyang LNG Tank - hole high-strength steel pipe STKT590 ultra-high-strength steel pipe pile and applying it. performance verification and establishment of design process. eter and number of piles. #4 unit construction pile of STKT590 steel
Environment
Bituminous coal can be replaced by using the produced dry matter Anyang Bakdal sewage sludge 16 cases of patent registration including Technology to recover Technology producing 8mm or less of produced dry matter, supplementary fuel with Renewable Technology producing 10% or less moisture content, dry matter having as supplementary fuel for cement roster kiln or for thermal power treatment facility no. 10-0812707 bio-solid fuel from 3,000kcal/kg or more heat value for thermal power plant by drying sludge with about 80% energy 3,000kcal/kg or more of heat value. plant. Environmental conservation through the stable treatment of Suwon sewage sludge treat- new environment technology inspection no. 116 organic sludge moisture content into 10% or less moisture content. sewage sludge dumped into the sea or landfilled. ment facility and no. 148
Seawater Saving 5~10% of filtered water-retaining tank installation expense Directly connecting design technology between processes to enhance energy efficiency, desalination/ Design technology for Consecutive flow type directly connecting the process design technol- and machine equipment expense, e.g., pump. Water supply project through Patent – Filtered water pressure control-type prevent secondary pollution by removing the filtered water-retaining tank and supply Advanced tankless membrane ogy that has removed the treated water-retaining tank and motor- Saving 5~10% of operating expenses by driving energy reduction Gwangyang Donghoan seawa- membrane filtration device and membrane clean- pump between the membrane filtration process and rear-end process in the membrane water filtration driven pump between water treatment unit processes. Reducing energy use by applying driving force at the fore-end ter desalination ing method filtration water treatment process. treatment process for rear-end process. Commercializing the bubble impregnation plug production technology 40%, 30%, and 10% required land, installation expense, and opera- After producing the bubble-impregnated plug through high-speed stirring and quick 2 cases of patent registration including no. 10- through high-speed stirring for the first time in the world; world’s top tion expense, respectively, can be saved compared to the existing Initial rainwater treatment facil- Water centrifugal sinking separation of high-density plug in the hydro-cyclone, non-powered, 1153187 Water treatment facilities Hydro J.B. technique cohesion speed and floating speed Treatment time is 6~8 minutes. Apply- fast sedimentation technology. ity construction at Gongchon treatment high-speed floating separation by impregnated bubble Treatment time is 6~8 minutes or new environment technology no. 352 under ing Korea’s new and first technology in the sewage treatment field in case Water system pollution can be prevented through river water sewage treatment facility 1/3 shorter than that for the existing technology. international patent application of rains. inflow in case of rains. Architecture Patent application nos. Onsite application Eco-friendly concrete technology that can reduce carbon emissions and create new Equal or higher quality can be ensured compared to slag cement, with Saving 10% of cost compared to slag cement, reducing 61% of CO Gwangyang SNG silo site; 7 Eco-friendly 2 10-2012-0008395 and 10-2012-0008663 technology of High- demand for slag; a technology that can apply 60~80% of slag use amount compared to less reduction of volume . Likewise, the technology is excellent in terms emissions compared to existing cement Limestone mining can be berthing raw material wharfs architecture Green technology certification no. Volume Slag Concrete cement. of initial-stage strength. reduced by 66%. No. 4 hot rolling GT-13-00046-11 Wind-induced For the optimal system selection of wind-induced controller to be installed at the Songdo Technology monitoring the movement of building and TMD in case of Customer-oriented system for building safety providing informa- vibration monitoring office of POSCO E&C, realizing cost savings and applying a monitoring system for the first typhoon and gales; the technology can warn building occupiers including tion on the building’s wind-induced vibration in case of gales such Songdo office of POSCO E&C - system of high-rise time in Korea compared to future maintenance by analyzing the performance and cost of the evacuation in case of gale, can be used to judge the abnormality of TMD. as typhoon. High-rise buildings existing wind-induced controller, installing TMD using concrete for the first time in Korea. building Onsite application Improving the structure system through the lightweight property Increasing the efficiency of the structure system and internal space usability through the Developing 800 Mpa high-strength steel and 100 Mpa high-strength APT construction of Guri technology of high- of the structural supplementary material and by increasing internal Patent application nos. development of high-capacity steel compound structure using 800 MPa high-strength concrete applying high-capacity CFT structure technology and onsite Inchang POSCO Housing As- Wind-induced vibration strength steel and steel space usability Reducing CO emissions by up to 30% through steel 10-2013-0025808 and 10-2013-0025809 steel and 100 MPa high-strength concrete. application technology. 2 sociation monitoring system compound structure and concrete volume compared to existing technology. 44 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 45
DEVELOPMENT OF FUTURE CORE REINFORCEMENT OF GLOBAL Constant Management Innovation TECHNOLOGY QUALITY MANAGEMENT and Profitability Enhancement
[ Quality Management System ] REINFORCEMENT OF GLOBAL Major Performances in 2012 Global Top 10 E&C Company QUALITY MANAGEMENT Quality improve- ment activities 1,145 cases The POSCO Quality World-class quality for ultimate customer Participation rate Key Issue Major Activities Future Plans satisfaction in quality improve- in 2012 01 02 03 ment activities at project sites 98 % Customer inside Basic inside Synergy inside • Improving quality • Improving construction quality • Expanding the operation of regular • Operating a quality management • Enhancing quality leadership quality diagnosis system • Preemptively responding to • Advancing capabilities to • Promoting Win-Win growth system • Advancing processes • Strengthening responses to customer needs manage overseas projects programs with partners • Strengthening the responsibility for overseas project risks Global QA • Realizing healthy project sites quality management • Enhancing the execution of quality specialist persons to focus on their businesses 21 support system
High-level quality management contributes to increasing corpo- Enhancing Quality Leadership Process Advancement Building Q-HSE Support System rate value by satisfying customers and shortening the construction We have built a Q-HSE One-Stop Support system to simplify ad- period. POSCO E&C is committed to ensuring world-class quality for POSCO E&C holds the executives’ meeting for Q-HSE under the top POSCO E&C ensures the best quality and the same quality any- ministrative work by offering best practice cases in line with the ultimate customer satisfaction with the target of evolving into one management once a month for the execution and management where in the world by focusing on process advancement. In 2012, project life cycle. Duplicates and similar outcomes have been of the global top 10 E&C companies. To this end, the company re- of company-wide quality strategy. Department directors who are the company strived for process improvement by linking the core rearranged after analyzing performances in each stage ranging sponds to customer needs preemptively and advances capabilities from contract to completion of quality, safety, and environment. responsible for quality, health, safety, and environment, as well process related to profitability together with the KPI and estab- to manage overseas projects. In addition, various supports for qual- lished a system to prevent and manage quality incompatibilities. In addition, best practice cases were utilized for the reduction of as executives of each business division attend the meeting, and ity improvement are provided to business partners in order to cre- Additionally, Q-HSE risk was minimized by standardizing the con- paperwork time at project sites where technical professionalism is major pending issues of projects are reviewed to prevent risks. ate excellent quality and differentiated value. With the awareness of struction procedures for Q-HSE in accordance with requirements required, which encouraged workers to focus on their businesses. the importance of quality, POSCO E&C will continue to enhance the of local laws and technology as well as operating an initial-stage POSCO E&C was awarded the grand prize at the quality manage- Fostering Global QA Specialists execution power of a quality support system for the elevation of support team for overseas projects. ment diagnosis for the POSCO Family in 2012 in recognition of our global quality capabilities. Fostering global QA specialists becomes more important, as the excellence in quality management as well as the management’s scope of our overseas business and project has been widened. high interest in quality. Improving Construction Quality In 2012, POSCO E&C acquired the pre-qualification (PQ) for the nuclear power business and fostered 8 specialists in the nuclear [ Quality Incompatibility Management System ] [ Q-HSE One-stop System ] We strive to ensure zero defects in our construction by regularly power business by obtaining the Korea Electric Power Industry operating the quality diagnosis system. At POSCO E&C, a company- Sharing of examples to Supporting order-receiving Code (KEPIC). Also, 5 employees acquired the ISO 9001 certification, On-site monitoring similar sites Contract wide regular quality diagnosis team and divisional quality inspec- an internationally recognized audit qualification. As a result, the • ITB Analysis tion teams implement specialized precise diagnosis on all construc- • Bid process company has a total of 21 specialists. Additionally, a regional circuit Provision tion areas including reinforced concrete structures and welding in Preparing construction of excellent education on quality management has been implemented to examples Starting order to improve product quality. • Q-HSE management plan construc- help employees upgrade their quality management capabilities. • Proposal of process management tion Headquarters/ Q-HSE POSCO E&C will continue to foster global QA specialists who A Site Business B site [ Quality Improvement Performances ] Division Construction management One-stop Water & En- can preoccupy and lead overseas markets by further reinforcing system Area Plant Energy Architecture Civil • Work permits vironment Analysis on Commis- quality education. • Weekly and monthly report on sioning Number of quality trends Simplification of 9 5 22 11 5 process sites administrative Number Establishment of measures to Completion work of quality 104 29 212 19 17 prevent recurrences improvements • Documents to be Completion Machinery installa- Structure’s concrete Substructure transferred to clients Facility protection Insulator-filling Details tion and welding surface condition compaction and curing error control • Completion schedule control control control 46 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 47
DEVELOPMENT OF FUTURE CORE REINFORCEMENT OF GLOBAL Constant Management Innovation TECHNOLOGY QUALITY MANAGEMENT and Profitability Enhancement
CONSTANT MANAGEMENT [ Management Innovation System ] Major Performances in 2012
INNOVATION AND PROFITABILITY Execution of innovation tasks 256 cases ENHANCEMENT Management Innovation Activities of POSCO E&C Key Issue Major Activities Future Plans Direction of 01 in 2012 02 03 innovation Cost reduction Strengthening Reducing Enhancing KRW billion profitability waste innovation base 365.7 • Securing financial soundness • Strengthening profitability • Accelerating the development • Creating growth value • Reducing waste of strategic tasks and expanding • Mega-Y • Office innovation • cQSS • Achieving strategic targets • Enhancing innovation base Mega-Y Major activities • D+ task development • Visual planning • Process innovation • Reducing company-wide and per- • Study club • Process optimization sonal waste Number of • Consolidating the cQSS integrated participants in tasks 1,831 persons support system
To swiftly respond to a rapidly-changing external environment Enhancing Profitability Accelerating the Development of Strategic Tasks Reducing Waste and take the lead in the market, POSCO E&C is promoting man- POSCO E&C executes the D+ (Definition Plus) activity, a task meth- agement innovation in the aspects of strengthening profitability, Expanding Mega-Y Operation odology to search for and implement proper tasks linked with Office Innovation reducing waste, and enhancing the innovation foundation. Our POSCO E&C is implementing the Mega-Y tasks organized by the corporate strategies. For the D+ activity, performance targets and POSCO E&C is carrying on a campaign to remove inefficient fac- management innovation is guided by the Management Innova- top management for the increase of profitability. In 2012, a total a task execution monitoring system were set up to develop tasks tors in daily jobs in order to increase job productivity and focus on tion Group at the company-wide level and the innovation work- of 82 Mega-Y tasks directly related to profitability had been ex- for synergy creation among departments and systematically man- value creation. The company has defined 8 kinds of major waste force is divided into the task leader, innovation leader, and inno- ecuted, which reduced costs by KRW 365.7 billion. The company age them. factors – work overload, correction, standby, action, information vation master for efficient innovation activities. POSCO E&C will will secure financial soundness and close the profit margin gap transfer, work delay, inventory, and lack of process/standardiza- ensure the harmonization of profit and growth by continuously over domestic competitors. Number of Executed Strategic Tasks promoting management innovation. (Unit: tasks) tion – and promoted 73 cases of improvements. As a result, 3,801 hours of office job waste have been eliminated. Closing Profit Ratio Gap between POSCO E&C and [ Innovation Workforce System ] Big 5 Domestic Competitors (Unit: %) Settlement of VP Activity Competitors POSCO E&C 2011 180 Solving problems The VP (Visual Planning), an innovation program to increase work • Definition of problems 11.5 2012 225 efficiency, is being operated. The VP plays an important role in es- • Analysis on sources 10.7 10.7 • Execution of improvements 9.6 tablishing a smart office culture by contributing to identifying all Task Leader 8.9 • Performances %p 0.2%p Gross profit margin profit Gross 3.1 7.6 obstacles in advance and increasing work efficiency. Particularly, 9.4 9.4 Operation of Study Club by making and checking daily, weekly, and monthly job plans in
Responsible for innovation of the Group and sites In-company study clubs are operated to settle an innovative linkage with the personal MBO, the VP helps employees acceler- 2009 2010 2011 2012 • Establishment of innovation plans culture and increase profitability. In 2012, we have focused on ate their execution power. We have strived to inform employees • Operation of innovation activities • Invigoration of innovation activities substantializing their activities by systemizing club activities and of the purpose and operation of the VP through training and pre- Innovation Number of Mega-Y Tasks (Unit: tasks) Leader • Innovation activities by leaders evaluating management. A total of 2,768 ideas to increase profit- sentations and to establish the VP linked with the personal MBO ability have been developed, which are expected to reduce costs through tailored coaching. 2010 70 Responsible for innovation of Divisions and Department by KRW 8.2 billion. • Establishment of innovation plans by divisions and offices 2011 104 • Operation of innovation activities by divisions and offices • Invigoration of innovation activities by divisions and offices Innovation 2012 82 Master • Coaching tasks 48 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 49
Adopting POWIS Enhancing Innovation Base We adopted the POWIS (POSCO Work Information System) for the Special Page simplification of individual weekly job reporting, quick decision Settlement of the cQSS Activities Securing Project making, reduction of documentation waste, and work process con- The cQSS (construction, Quick, Six, Sigma), an on-site innovation Competitiveness trol. The POWIS has improved the processes of instruction, report- activity, is executed for the realization of 5 KPIs (cost, safety, environ- ing, and meeting which cause job-related fatigue to employees. ment, quality, and process) at project sites. The cQSS has become Reports drawn up through the POWIS can be shared even with POSCO E&C’s on-site innovation brand, which is being undertaken The Mega-Y enhances competitiveness and value of our projects. the top management without private e-mail or messenger. Simple in overseas sites as well as domestic sites. In 2012, we built a system The Mega-Y, POSCO E&C’s unique management innovation activity to develop and complete core tasks, has become a driving force of use and an absence of the file attachment function of the POWIS to diagnose the maturity of cQSS and an integrated cQSS support increasing competitiveness and value of its projects. POSCO E&C intends to expand and strengthen profitability-centered Mega-Y activity enables employees to reduce waste for reporting and to fully focus system in which an Innovation Promotion Team, a Q-HSE, and a TA linked with its strategic direction such as the expansion of top-tier products and overseas market, advancement of EPC project manage- on their jobs. Also, most executive meetings and department meet- Group participated in order to elevate the level of cQSS activities ment, and fortification of financial soundness. To this end, the company will complete core tasks through organic collaboration among ings are currently held by using the POWIS. As a result, the POWIS and promote standardized innovation activities throughout proj- business divisions under the supervision of the top management. Monitoring the execution of tasks and sharing performances will be pro- has contributed to reducing Word & PPT formatted reports (42%), ects sites. moted by operating the Mega-Y Council and company-wide innovation councils. In addition, completed tasks will be constantly managed increasing clearer instructions (32%), and efficiently managing per- for the improvement of its performances. sonal job carriers (11%). Process Optimization POSCO E&C operates the Management Consulting Team to [ Mega-Y Promotion System ] [ Cost Reduction Targets and Performances ] reduce waste within departments and improve inefficient job [ Major Function of the POWIS ] Monitoring & Facilitate processes. Through a process diagnosis on order-receiving CEO Business Area Supporting Staff Enrolling weekly and regular personal jobs and issues Cost Job enrollment operations, the company established an exclusive support system Mega-Y Promotion Innovation KRW 333 billion KRW 17 billion (File attachments are not available.) Taskforce Promotion Team Reduction for business areas requiring support at the initial stage such as Targets Reporting to the superior organizations after Reporting financing, contracting, and claiming. As for overseas projects, E&C Mega-Y Procurement Mega-Y PLC Mega-Y considering the importance of enrolled jobs POSCO E&C set up a department in charge of claims and has Enrolling feedback on reported jobs by Enhancing capabilities for Sharpening capabilities for order- Performances in Cost Reduction (Unit: KRW in billions) Feedback focused on enhancing capabilities to manage overseas facility independent engineering Strengthening capabilities receiving, sales, and business department directors manufacturing after diagnosing major processes of overseas and business implementa- for global procurement management including the Target Performance tion (cost control and (cost control area) extension of a feasibility study on Job search Searching the job history enrolled by the individuals projects. In 2012, a total of 24 tasks were conducted and financial capability areas) new markets (capability area) 117% 128% 365.7 107% performances of KRW 94.2 billion have been created through the 350 101% Support for meetings Sharing the reported jobs through meetings [ Operation of Councils for Profitability Improvement ] 97% process optimization. Company- Company-wide 135.5 Mega-Y Council wide Innovation Council 104% 77.1 68.4 62.8 Green Building Project using New Technologies • Performance check and sharing • Performance check and sharing Innovation of Reporting Process • Benchmarking and synergy • Benchmarking and synergy 21.9 enhancement among Mega-Ys enhancement among Big-Ys One of the biggest changes by the adoption of the POWIS is the [ POWIS Reporting Process ] innovation of the reporting process. There has been a great deal Company- Plant Energy Civil Architec- Supporting wide Engineering ture Staff of time wasted in the process of documentation and reporting CEO of POSCO Weekly reporting by CEOs of the POSCO Family Value Engineering of important matters in the past, which might have resulted in a Weekly reporting to the CEO and reporting on critical Value Engineering (VE) is an innovative process to create the best ways to conduct a project with a collaboration of each area of expertise in or- CEO of POSCO E&C delay of the decision making process. However, the POWIS made it issues to the superior office der to acquire the best value with minimum expense for project life cycle, through which cost reduction and quality improvement are expected. possible for the contents of reports from the working-level staff to General Executive/ Weekly reporting to general executives and division heads POSCO E&C has promoted VE activities for the Gwangyang No. 4 Hot Rolling Mill Establishment project and, as a result, independently completed automatically be reported to their superior office, which resulted in Head of Division and reporting on critical issues to the superior office the design with its own technology which had been applied by foreign technology. Moreover, a study club at the site has developed 71 tasks, of lightening the job loads of the working-level staff and generated Weekly reporting to office heads and reporting on which 51 tasks have been executed for the project in consideration of economic efficiency, technical attribute, applicability, and safety. Conse- an efficiently quick decision-making process. Consequentially, the Head of Office critical issues to the superior office quentially, POSCO E&C was able to reduce costs by KRW 23.4 billion in the areas of civil, architecture, machinery, and electricity, and was awarded adoption of POWIS has reduced waste in our jobs by stimulating Excellent Prize in the private sector at Project Design VE Competition sponsored by the Ministry of Land, Infrastructure and Transport. innovation and increased the efficiency of decision-making. Leader of Each Reporting on critical issues of group-based Business Group jobs to the superior office
Team Leader and Weekly and regular enrollment of work Working-level Staff
Gwangyang No.4 Hot Rolling Mill Establishment Project Site Award for Engineering VE Competition 50 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 51
STRENGTHENING ENVIRONMENTAL & SAFETY MANAGEMENT
Placement of Environmental Converted Industrial Managers at Project Sites Waste Recycling Accident Rate
100 % 76 % 0.10 % *As of domestic sites * As of domestic sites * As of domestic sites
Settlement of Environmental Management and Adaption to Climate Change 52 Encouragement of Responsible Safety Management 56
Songdo Central Park & POSCO E&C’s Songdo Office Building in Incheon 52 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 53
SETTLEMENT OF ENVIRONMENTAL MANAGE- ENCOURAGEMENT OF RESPONSIBLE SAFETY MENT AND ADAPTION TO CLIMATE CHANGE MANAGEMENT
[ Green Management Strategy System ] SETTLEMENT OF ENVIRONMENTAL Major Performances in 2012 Global TOP 10 Green Company (environmental accidents MANAGEMENT AND ADAPTION TO Number of environ- equal to and higher than mental accidents 0 case prosecution) CLIMATE CHANGE Settlement of Environmental Management System and Preparation to Greenhouse Gas Regulations Establishment of an Key Issue Major Activities Future Plans Response to IT-based greenhouse gas 01 in 2012 02 03 climate change Accomplishment of 3,000 units Settlement of greenhouse management system in voluntary environmental gas management system and • Preventing environmental accidents • Establishing environmental manage- • Implementing voluntary environ- improvements to maintain a zero reduction of greenhouse gas at project sites ment system at project sites mental improvement activities at environmental accident record emissions by 1% • Responding to greenhouse gas • Building a greenhouse gas inventory project sites regulations • Supporting green management of • Verifying greenhouse gas emissions Amount of waste (compared to • Expanding green management partners • Presenting green management Preventing environmental ac- Responding to greenhouse gas Expanding green management Down % 2011) performances cidents and enhancing systems regulations 36
The Settlement of Environmental Management and adaption to cli- Strengthening Support for the Prevention of Compliance with Laws and Regulations Biodiversity Protection mate change have become more important for corporate sustain- Environmental Accidents at Project Sites It is not easy for the E&C industry to comply with environmental POSCO E&C is striving to minimize environmental impacts by able growth. Particularly, E&C companies are required to perform We made a special visit to project sites with a high possibility of laws and regulations because working conditions are frequently preemptively analyzing environmental risks through an environ- various environmental management activities due to large-scale environmental accidents and reviewed their response to environ- changed according to the feature of each project. POSCO E&C has mental impact assessment. In particular, our project sites preserve civil engineering projects and urban development. Insufficient en- mental laws and licenses and checked noise, vibration, and their continuously reinforced training and criteria to comply with en- the ecosystem by taking protective actions in case of discovering vironmental management can result in additional environmental waste control status in order to prevent environmental accidents. vironmental laws and regulations at all project sites. As a result, endangered and/or rare species. In 2012, the “ranunculus kadzu- costs and damage to the corporate image. Furthermore, tightening Circuit training was conducted to foster environmental managers there was no serious accident or penalty in relation to the envi- sensis makino”, an endangered wild plant, and the “phacelurus lati- regulations on greenhouse gas emissions increase risks. Therefore, at projects sites and the cQSS workshop was held to provide en- ronment in 2012. folius”, also a rare plant, were found on the East-West access road it is essential to respond to environmental requirements. POSCO vironmental education and to identify environmental risk. In addi- of the Songsan Green City project site and 77th national high- E&C is proactive in responding to environmental regulations of the tion, an integrated Q-HSE education was offered to projects sites Environmental Management for Overseas Project way construction site. POSCO E&C made a plan to move these government in order to secure environmental soundness and sus- which were at the initial stage. POSCO E&C has built an environmental management system to endangered and rare plants through an expert’s advice and the tainability and prevent environmental accidents. Support for green satisfy local requirements on the environment ranging from the opinion of the Ministry of Environment. According to the plan, management of business partners is being expanded as well. POS- Placement of Environmental Managers at Project Sites order-receiving stage to the execution stage after contracting in the “ranunculus kadzusensis makino” will be moved to adjacent CO E&C will evolve into one of the global top 10 green companies To develop a sense of environmental responsibility at project sites case of overseas projects. By clarifying the role and responsibil- rice paddies and nearby habitats, the Cheollipo Arboretum, and by focusing on strengthening environmental management and and prepare the Greenhouse Gas & Energy Target Management ity of each business division, project site, and the Safety & Envi- the Shingu Botanic Garden. The “phacelurus latifolius” will also be spreading green management activities. System, POSCO E&C established the criteria for placing environ- ronment Group, and determining work processes, the company moved to the Reed Marsh Park of Lake Shihwa. The movement mental managers at sites and made personnel appointments. An prevents diverse risks from overseas projects such as violation of will be carried out in 2013 and monitoring and management will Preventing Environmental Accidents and efficient job system was established by reestablishing the role and environmental regulations and occurrence of additional costs. continue as well. Strengthening Supports responsibility after analyzing 21 environmental management jobs including response to environmental laws and licenses and waste [ Management Activities to Prevent Environmental Accidents ] Improvement of Environmental Management control performance. Placement of Environmental On-site Environmental Reduction of Waste Generation and Treatment Costs Level at Project Sites Managers at Project Sites Inspection Waste concrete Mixed waste Waste fine powder Others Waste wood POSCO E&C has increased the number of site inspections from 416 times KRW 146 times in 2011 to 416 times in 2012 for the improvement of 940 16.3 billion 100% 285% thousand tons environmental management at project sites. This effort resulted in KRW 113 % 2.1 -36 0.3 billion KRW
reducing waste and treatment expenses. Waste volume fell 36% persons 4.1 8.1 billion KRW thanks to more recycling and waste treatment expenses were re- 51% 146 times 600 1.8 58 0.2 billion thousand tons` 4.3 1.1 duced by KRW 2.8 billion through the separate sorting of mixed persons 1.5 waste. The company was also able to save KRW 100 million in 5.5 3.5 treating waste by hiring free waste wood treatment companies. Training of Environmental Managers at Projects Sites 2011 2012 2011 2012 2011 2012 2011 2012 54 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 55
Incorporating Green Management Fostering Experts Responsible for Green Management l To help throughout the Supply Chain business partners execute green management effectively, we have fostered 20 responsible experts. They have gained on-site training Compliance of Special Page Reduction of GHG Emissions and Costs as well as acquired relevant knowledge through the benchmarking Greenhouse Gas Regulations of Business Partners of Japanese construction companies and government agencies. POSCO E&C made an agreement on supporting business part- Building Green Communication System l We opened an online ners’ green management with the Ministry of Environment and community and held discussion meetings for active communica- Preparation to Compliance of Regulations the Korea Environmental Industry & Technology Institute in April tions with our business partners, through which data and informa- Regulations on greenhouse gas (GHG) emissions are tightening due to the harmful effects from global warming and, therefore the Korean 2011. Since then, the company is promoting the diffusion of green tion related to green management have been shared. To support government plans to reduce GHG emissions by 30% from businesses by 2020. POSCO E&C has established plans to respond to GHG management to business partners. partners who intend to publish environmental reports, our staff regulations by calculating company-wide GHG emissions including its business partners and reviewing relevant standards in consideration visited them to offer advice on how to create the content and to [ Direction of Support to Diffuse Green Management ] of the features of the E&C business. establish a data collection and management system. Green Identification of eco-friendly engineering Engineering (E) (Establishment of eco-friendly engineering system) Partnering in Eco-Friendly Building Construction l Five business [ Response Plans to Greenhouse Gas Regulations ] Green Improvement of equipment management and operation partners were engaged in the construction of Chadwick Interna- Procurement (P) methods, Improvement of facilities including energy diagnosis Establishment of an IT-based GHG management system Preparation of reporting to the government tional School, The Sharp Central Park, and The Sharp Harbor View - Independent establishment and outsourcing of data - Reporting on annual emission results to the Green Minimization of defect and reconstruction by work standardization, in Songdo which were awarded the LEED certification. They par- processing government Construction (C) Improvement of project management and construction method ticipated in landscape tree planting and minimization of energy consumption for heating & cooling, and residential noise. To support green management in engineering, procurement and September 2012 January 2013 March 2013 2014 construction, POSCO E&C helped business partners enhance envi- Holding a Green Management Contest l A contest was held to ronmental management capabilities and energy efficiency. These share green management performances and to pledge to green Inspection of GHG emission sources at construction sites Emissions calculation and performance management activities contributed to reducing about KRW 1.5 billion of costs management activities with business partners. - Status of partners’ equipment and receipts of oil - Verification of emissions and analysis of possible and 1.7 thousand tons of GHG emissions. purchases reduction
Building Green Management Strategies for Participants l We diagnosed the green management status of business partners who participated in our promotion and established strategies and direc- Building an IT-based GHG Management System GHG Emissions Control tions to support their engineering, procurement, and construction POSCO E&C completed the inventory survey at its office buildings As a result of calculating GHG emissions within September 2012 businesses. We also developed procedures in consideration of 28 and project sites, and built an IT-based GHG management system and March 2013 through the system, 27% of total emissions varieties of common standard documents and corporate features to simplify the GHG emissions calculation process. The company were generated from office buildings and projects sites and the in order to boost their green management performances and pro- has calculated GHG emissions by utilizing data collected at 4 remaining 73% were from equipment operations of business mote the standardization of green management. office buildings and 98 project sites through the system since partners. Based on the result of emissions analysis, we prepared January 2013. To assure the accuracy of collected data, our staff plans to increase energy efficiency in the construction and to Establishing Performance Management System l For the moni- Green Management Contest visited project sites and examined real input data such as energy reduce GHG emissions, which include incentives for best business toring and measurement of green management performance, we established a green management index control system and devel- consumption and costs. The reliability of the data was also secured partners. We expect to effectively reduce GHG emissions thanks to oped and provided a GHG emissions calculation method. In addition, Eco-Friendly Certification and Best through a third-party verification process. data-based GHG management. Also, the adoption of cost analysis 21 green management-related systems have been improved for the Practices Awards by basic unit control will contribute to cost reduction at project increase of efficiency of resources and energy in E, P, and C, and re- sites. duction of GHG emissions and environmental pollution effectively. We at the Pohang No.3 Finex project site carried out vigorous en- vironmental improvement activities such as the installation of a Building Green Management Design System l Together with waste treatment plant and sprinkler, strict area ownership man- Total GHG Emissions Analysis of Emissions at Office Analysis of Partners’ Emissions (Unit: tCO ) Building and Project Sites (Unit: tCO ) (Unit: tCO ) POSCO Engineering, we built an IT-based eco-friendly design man- agement, and site purification. As a result, this project site won the 2 2 2 agement system, through which we secured best practice cases “Eco-friendly Construction Site” certification from the Maekyung for green design which included resource, energy, greenhouse gas, Safety & Environment Institute in June 2012. In addition, the Song- pollutants, and emergency. do The Sharp Green Square project site was awarded the Chair- Supporting Energy Efficiency Diagnosis l We diagnosed the en- man’s Prize of the Korea Environment Corporation by presenting ergy efficiency of business partners in the area of green procure- an example of “Preventing Scattered Dust through the Installation ment. Cost reduction a year is expected to reach KRW 15.9 million of Windows and Doors in Close Proximity” at the best practice 142,370 35,006 107,364 contest for construction environment management, organized thanks to the identification and improvement of energy loss factors 2012 2012 2012 throughout major production processes. by the Construction & Environment Association. *Scope of emissions calculation in 2012: 134 project sites and 4 buildings in Korea **Scope3 (partners’ GHG emissions) is an estimate by the verified emissions during a month in 2012. 56 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 57
SETTLEMENT OF ENVIRONMENTAL MANAGE- ENCOURAGEMENT OF RESPONSIBLE SAFETY MENT AND ADAPTION TO CLIMATE CHANGE MANAGEMENT
[ Safety Management Strategy System ]
Major Performances in 2012 ENCOURAGEMENT OF RESPONSIBLE Global E&C Company That Leads the Advanced Safety Culture by Having Regard for Human Life (Achieving the target of accident rate less than 0.08% in 2013)
SAFETY MANAGEMENT Converted Voluntary participation of workers guided by the accident rate 0.10 % (as of domestic sites) execution of construction sites and business partners
Key Issue Major Activities Future Plans in 2012 Improvement of 01 02 03 Building support system Concentrating core Improving safety unsafe behavior for overseas project capabilities infrastructure 19,102 cases • Realizing safety risk • Diffusing safety culture participated • Regular site inspection and educa- • Operating a task force to support over- • Implementing the Area Ownership • Building an integrated safety • Reducing accident rate by all tion by the management seas project at the initial stage Program by all site workers control center • Operating safety and health • Intensively managing and improving • Substantially preventing unsafe • Enhancing capabilities to respond to • Building a foundation for partners- • Invigorating the “Keeping Project management system unsafe behavior behavior overseas business risks led safety activities Sites Clean and Safe” campaign Keeping project site • Conducting training on safety for • Improving safety infrastructure • Diffusing an integrated control clean and safe 100 % (as of domestic sites) system employees to be sent to overseas sites and local corporations and branches
As nothing is more important than safety in the construction indus- visit projects sites for the inspection and training on safety. In 2012, Improvement of Unsafe Behavior (Unit: cases) The safety of site facilities has been improved in accordance with try, continuous management and accident prevention are neces- 19 executives carried out on-site inspections more than once every site workers’ vigorous requirements and the execution of work at
sary. Negligence in safety management may threaten the lives of couple of months and training on safety every quarter. As a result, a 4,688 unsafe facilities has been decreased as well. workers and give rise to accidents. It can also cause various negative total of 203 inspections and 135 site-tailored training on safety have 3,657 3,944 3,710 effects such as a deterioration of corporate image and occurrence been implemented at 84 project sites. These activities are expected Execution of Work at Unsafe Facilities (Unit: cases) 3,103 of additional cost. With the pursuit of safety and health as the first to heighten the effect on disaster prevention, improve working priority, POSCO E&C has focused on diffusing the culture of safety in conditions at sites, and boost worker morale. 1,407 which the management and all business partners participate and August September October November December 818 intensively managing unsafe activities. The infrastructure for safety, Enhancement of Onsite Safety Responsibility 919 470 512 including its integrated control center, has been also improved. of Partners’ Executives
POSCO E&C will realize world-class safety by encouraging safety- The Safety & Health Council meeting is held once a month at each About 98% of site workers have participated in the improvement of August September October November December centered execution led by project sites and business partners and project site of POSCO E&C, which include the site manager and unsafe behavior through the Area Ownership Program and a total voluntary participation by workers. safety manager of POSCO E&C and executives and site manager of of 19,102 cases have been improved. Non-compliance with wearing There were a lot of comments about non-compliance with wear- business partners. At the meeting, on-site safety and health related protective gear and execution of work at unsafe facilities accounted ing protective gear due to the increase of regular and new workers. Diffusing Safety Culture Participated by All Em- issues are reviewed and discussed on improvement plans. POSCO for 31% and 25% of major unsafe behavior respectively. However, the number of cases of non-compliance with wearing ployees E&C intends to make business partners’ executives continuously at- protective gear has been decreasing thanks to our continuous im- provement activities. tend the meeting for the elevation of their responsibility on safety Type of Unsafe Behavior (Unit: %) Intensification of Leadership on Safety Management at project sites. Improvement of Non-compliance with Wearing Protective Gear To increase the effectiveness of on-site safety management and Non-compliance with wearing protective gear Execution of work at unsafe facilities enhance disaster prevention, POSCO E&C is promoting the All Ex- Intensively Managing and Improving Unsafe Inappropriate instruments Access to dangerous areas Others 1,437 Improvement of 1,324 ecutives-led Safety Responsibility System and Safety Activities by Behavior non-compliance 868 1,515 with wearing 857 Responsible Executives. The All Executives-led Safety Responsibility protective gear (Unit: cases) 15,500 17,000 31 15,000 System is to let each of the executives below Vice President (exclud- Operation of Voluntary Safety Programs at 14,000 33 Number of daily ing executives of overseas business departments and residential ex- Project Sites average regular 12,000 ecutives) manage the safety of 2 or 3 project sites exclusively. Since We are operating the Area Ownership Program by area, facility, and workers 94 91 2012 (Unit: persons) 84 87 72 the launch in July 2012, 48 executives have conducted a total of time zone to prevent site workers’ unsafe behavior. Site workers who Number of 224 safety support activities and collected 133 suggestions, which give potential causes for accident such as not wearing protective gear 4 New workers 7 (Unit: one contribute to solving difficulties at project sites. The Safety Activities or dismantling safety facilities are promptly weeded out from the site. 25 hundred persons) by Responsible Executives is to let designated executives for safety Other violations are regulated by the three-strikes-and out system. August September October November December 58 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 59
Immediate Safety Improvement System Building a Foundation for Partners-led The Immediate Safety Improvement System is being implemented Safety Activities to prevent the lack of efficiency in safety plans and delay of safety POSCO E&C is encouraging business partners, who manage site improvement. In accordance with this system, each project site is workers in real, to lead the safety at project sites to strengthen their required to immediately stop its work when safety criteria is not execution of zero-accident achievement. In the case of contracts complied with and provide workers with safety training to reduce worth over KRW 5 billion with business partners, the company risk. Also, each project site must submit its safety plan and have it requires them to mandatorily place exclusive safety managers at approved before commencing work. project sites for the improvement of their independent safety capa- bilities. The execution of safety training led by business partners is Improving Safety Infrastructure also stipulated in the contract for the enhancement of their safety activities in the aspect of a system. In addition, the management of Special Page Building an Integrated Safety Control Center business partners participates in the Safety & Health Council once a Most recent accidents in the past 4 years have occurred because month to increase the sense of safety of their site workers. of workers’ unsafe behavior, which means that the improvement of employee behavior is preceded to prevent accidents. To this end, Keeping Project Sites Clean and Safe POSCO E&C built an integrated safety control center at the head- Voluntary participation from site workers is essential for the creation quarters to monitor site workers’ unsafe behavior in real time after of project sites without accidents. POSCO E&C has been promot- completing the installation of 120 CCTVs at 38 project sites since ing the “Keeping Project Sites Clean and Safe” campaign to cor- CEO On-site November 2012. At the integrated safety control center, the head- rect wrong habits of workers and create a clean, comfortable, and quarters’ staff in charge of safety is monitoring the execution of healthy workplace through small changes in working conditions. Safety Inspection work at project sites throughout the year without holidays. Upon The changes include the installation of safety passageways and the detection of unsafe status and behavior, immediate improve- rest areas, as well as the operation of a health-keeping center at the ment is requested to the onsite safety managers and the results are project site. These facilities are being operated in all domestic proj- transferred to the center. A total of 4,184 cases of unsafe behavior ect sites and 83% of overseas sites. have been improved from November 2012 to May 2013 and we plan to install CCTVs at more projects sites in order to increase the level of accident prevention in the future.
Path to Changes [ Unsafe Behavior Control Process The path to changes (safety pas- by the Integrated Safety Control Center ] sageway) built at the gate of site helps workers raise their safety Notice through the Hot Line Notice of results and consciousness consistently. (Site manger and safety manager) establishment of the database
Health-keeping Center Detection of risk factors Onsite measures Through the health-keeping cen- ter at each site, we check health conditions of workers.
The CEO on-site safety inspection has been conducted to lead the diffusion of safety culture in which all em- Cafeteria for Workers ployees participate with the purpose of realizing zero accident. Our CEO has made 6 visits to domestic proj- Hygienic and clean cafeteria at ect sites and 2 visits to overseas sites to inspect the safety, through which a total of 580 workers (380 from each site provides workers with places for relaxation. domestic sites and 200 from overseas sites) participated in on-site safety training. The CEO of POSCO E&C visited and intensively inspected the installation of safety facilities as well as the operation of various safety programs such as unsafe behavior management, area ownership, and creation of a clean and safe project site. He also conducted training on the importance of compliance with safety and ethics, status of accidents, and intensive safety activities to prevent acci- Integrated Control Center dents. The CEO on-site safety inspection will continue in the future, which is expected to further elevate the awareness of safety for all employees. 60 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 61
IMPROVEMENT OF THE SHARED SOCIAL VALUE
Time Spending on Volunteer Voluntary Donation by Customer Satisfaction Activities per Employee Employees Ranked st 1 33.6 hours KRW 343million at KS-QEI for 4 consecutive years
Enhancement of Customer Value and Satisfaction 62 Fostering Global E&C Leaders 66 Pursuit of Win-Win Growth with Business Partners 70 Social Contribution to Local Communities 72 Diffusion of Korean Culture in Brazil – Making Korean Traditional Masks 62 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 63
Enhancement of customer value Fostering Global E&C Leaders Pursuit of Win-win Growth with Social Contribution to Local and satisfaction Business Partners Communities
[ Customer-centered Management System ] Enhancement of customer value Major Performances in 2012
Customer st AND satisfaction satisfaction Ranked at KS-QEI for 4 1 consecutive years
Key Issue Major Activities Future Plans Increase of customer in 2012 Increasing product Strengthening Improving service Customer related 01 02 03 satisfaction quality supports for AS level quality improvement 2,843 cases • Managing defects of buildings • Increasing quality level • Tightening quality inspection pro- • Inspection of errors on • Voice of customer (VOC) • Operation of the • Feedback to customers • Strengthening AS service cesses blueprints • Operation of the CCM “Onmaum” service • Managing customer satisfaction • Improving service level • Establishing an AS response system • Quality check-up Council • Capability development • Ensuring stability of CS system in and • Improvement of con- • Integrated customer for CCM Customer-centered System operation out of Korea struction standards support system management
POSCO E&C increases customer satisfaction (CS) at all project stag- tion and quality in order to standardize the quality level of POSCO CCM Activities es from the construction to follow-up service by promoting CS ac- E&C. We will continuously strive to meet customer expectations We obtained the CCM certification in 2011 by completing the es- tivities in linkage with quality control. Based on a superior quality beyond merely ensuring quality. tablishment of the customer satisfaction (CS) process and devel- management system, the company strives to prevent defects of opment of a manual, through which our CCM is implemented. In buildings in order to head off customer complaints in advance. Strengthening Supports for AS particular, our three in-company councils are being operated for Upon the occurrence of a complaint, the AS support is stimulated rapid responses to customer complaints and damages: working- for the reflection of various opinions of customers. POSCO E&C will We always listen to the voice of customers (VOC) to provide the level staff meeting for the settlement and practical use of CCM, continue to strive to provide customers with high-class services best products and services. The collected VOCs are reflected in our VOC Feedback meeting to review actions and feedback to onsite to contribute to the improvement of their quality of life. products and services after being analyzed at the VOC Feedback VOCs, and CCM Compliance Committee to resolve risks at each Integrated Customer Support System meeting. We are continuously improving our system to receive stage ranging from order-receiving and licensing to moving-in Increasing Quality Level and treat requirements on AS for a rapid response to customer and maintenance. complaints. Enhancing AS Efficiency and Treatment Process CS activities start with maintaining high quality. With the rec- To provide customers with products and services with better ognition on the importance of pre-inspection rather than post Building an Integrated Customer Support System quality, POSCO E&C constantly makes up for internal VOC treat- countermeasures to customer complaints, POSCO E&C is tight- POSCO E&C built an integrated customer support system which ment processes and efficiency. Defects collected through VOC ening quality inspection activities to increase the quality level. was upgraded from an existing defect receipt and treatment are shared with construction sites and reviewed at VOC Feed- For instance, we preliminary inspect errors and non-reflection of system. This new system boasts high linkage with other opera- back meetings to inspect our business processes and seek out instructions on blueprints through the blueprint review meet- tion systems for sales, outsourcing, and procurement, etc. Feed- solutions and precautions together with relevant departments. ing. During the construction, quality inspections and assessment back on real-time monitoring results of internal system users and Through these activities, we are striving to prevent the same meetings are held to improve the predicted shortcomings in treatment results on AS (After Service) and BS (Before Service) problems from occurring again and again. quality. In addition, training for the improvement of construction are given to the relevant engineering and construction division CCM Compliance Committee standard and quality is conducted to increase the awareness of through this new system, which further ensures our support for Improving Service Level quality management and consequentially customer satisfaction. customers. By utilizing this system, the company will do its best to provide thorough BS, rapid AS and minimization of defects before At POSCO E&C, customer-centered management (CCM) is actively Publishing a Guidebook for Quality Improvement move-in. being promoted in order to build a customer-centered mindset and POSCO E&C published a guidebook containing details to be in- work process to ultimately increase the level of customer service. spected during the construction for quality improvement. This Customer complaints and damages are rapidly treated through the guidebook enables sharing our knowledge on customer satisfac- CCM Compliance Committee and working-level staff meetings. 64 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 65
The results drawn up through the councils are shared for the en- Realizing Emotional CS Developing Customer-Tailored Products based hancement of inspection, treatment, and feedback on product In 2012, POSCO E&C developed the “Healing Heart Service,” an on the Concept of “He-a-rim” quality, which contribute to upgrading customer satisfaction. As emotional service product as a sub-specialized brand of the We are focusing on developing products considering intuitive a result of these efforts, POSCO E&C was recognized for its excel- “Onmaum Service,” to be offered to candidate buyers, buyers, and usability, functionality, and design from a customer-oriented lence in CCM and service quality by ranking 1st in the apartment residents of “The Sharp” apartment. It consists of various activities perspective. A design concept was set at “Fully Understanding sector of the Korean Standard-Quality Excellence Index (KS-QEI) to fully understand customers such as stress check-ups and art New Inconvenience Caused by New Technology” in order to for 4 years in a row. psychotherapy by specialized art therapists. solve customers’ possible inconvenience from the adoption of new technology. Our new design concept is being introduced to integrated electronic devices such as the One Pass Card, which Training on the CCM [ Onmaum Service ] can solve problems of inconvenience and increase product value. In addition, we are striving to create a new-concept living Onmaum Clean Service “He-a-rim” to Increase Customer Satisfaction environment such as various storage spaces and small-sized Improvement of cleanliness Onmaum Clear Service apartment plans in order to deliver the best value and better in the household by provid- Developing a Service Brand ing cleaning convenience to customers. For instance, our “Songdo The Sharp services for bathroom, With the concept of “He-a-rim” which means fully understanding Betterment of kitchen, and Master View” boasts high space efficiency by applying specialized customers from their standpoint in Korean, POSCO E&C launched green spaces through mattress, spaces such as a hybrid open library, a new-concept dining room, landscape management etc. Cleaning of exterior a new service brand titled “Onmaum Service” This new brand is Onmaum Greenand Service environmental services windows, etc. and one-stop laundry room reflecting customer needs. Thanks to in the complex KS-QEI Certification Conferment Ceremony defined as the need to serve customers heartily to fully under- our best effort to develop customer-tailored products based on stand them, which mirrors our firm commitment to customer the concept of “He-a-rim,” our flagship housing brand “The Sharp” Onmaum Cultural ServiceDrawing contest for Stress check-ups and art Training to Enhance CCM Capabilities satisfaction. children and “The psychotherapy, etc. has been highly recognized for its design competitiveness by Sharp Festival”, etc. POSCO E&C is proactive in training employees and enhancing winning prizes from domestic and overseas prestigious design
their mindset toward the CCM. In 2012, a total of 13 training Free knife-sharpening awards. programs about the understanding of CCM and leadership Service with all my heart and bicycle repair services, etc. for voluntary CCM have been conducted for 870 employees. Onmaum Healing Heart Service Onmaum Life Service Particularly, some training programs including skills to serve Service to warm the heart of customers customers were carried out in a type of direct experience such as role play in order to elevate the effect of training. After training programs, a lot of opinions to activate the CCM of the company Service to listen to the voice of customers at all times have been discussed, which included publishing a manual to Fully Understanding Customers serve customers at spot businesses and diffusing excellent CCM cases to form a consensus. The “Onmaum Service” is a unique heartfelt service brand of [ Case 1 – One Pass Card ] [ Case 2 – Hybrid Open Library ] “The Sharp” to meet customer needs with all my heart.
The One Pass Card, to be applied to “The Sharp Park City” in Busan, POSCO E&C applied the Hybrid Open Library plan to “The Sharp is an access card with the function of calling the elevator as well as Green Walk 3” in Songdo. The existing dining room was transformed opening the main door of the apartment. The One Pass Card has into a library with a space to place a table for 4~8 individuals, with been upgraded in design from existing problems such as an insuf- an Irish dining table and a built-in bookshelf. The Hybrid Open ficient battery capacity and an inconvenient battery-recharging Library provides customers with a space for communication be- system. As a result, it was awarded the iF Award in 2012, being rec- tween family members, children’s study, and housewives’ reading ognized for excellence in design and function. and working. Launching of the “Onmaum Service” 66 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 67
Enhancement of customer value Fostering Global E&C Leaders Pursuit of Win-win Growth with Social Contribution to Local and satisfaction Business Partners Communities
[ Global E&C Leader Cultivation System ] Fostering global Major Performances in 2012 Completion of Site E&C LEADERS Manger Develop- ment Course 27 employees Securing global E&C leaders Key Issue Major Activities Future Plans Operation of Regular 01 in 2012 02 03 Fair Performance Performance Management Regular Performance Management Management System • Developing employee competency • Securing global E&C leaders • Fostering local specialists Fostering overseas business managers • Respect for employee diversity and • Fair personnel evaluation • Managing fair evaluation indices Employing local specialist compensation • Improving organizational culture • Making a great work place • Employee welfare benefits Establishment of New Establishment of Great Work Place Family Care Leave System
Securing and fostering global E&C leaders becomes more im- that are necessary for their transformation into internationally Fostering Job Experts Fostering Global Business Experts portant, as the scope of overseas business has been widened. competent individuals. Job-related competency training was established and operated The company also provides training courses on fostering experts POSCO E&C fosters future E&C leaders through systematic human by the position and business sector in accordance with the level in foreign regions, improving language proficiencies, training for resource development programs. A regular performance man- [ Training Courses for New Employees ] of jobs. We also provide excellent personnel with opportunities employees to be dispatched abroad, and so forth in an effort agement system is being operated for fair personnel evaluation • New employee orientation • Job rotation for special seminars and study abroad programs in an effort to to enhance employees’ global competencies. The Overseas First year • Project simulation • On-site internship and compensation and an advanced welfare benefit program is of work help them acquire advanced technology and grow into experts Regional Expert program, for example, dispatches highly qualified • On the job training at the headquarters offered to build a corporate culture with the pursuit of harmoniza- in their fields. employees abroad to stay in a foreign country for one year,
tion between work and life. Second year • Construction and Management Academy carrying out advanced research on the regional management of work • Leadership Academy • Global Business Academy Fostering Project Managers environment. The company also provides step-by-step training Securing Global E&C Leaders Given the increasing complexity, scale, and various stakeholders’ programs for employees staying abroad to help themselves adapt Third year • Research presentation of work requirements involved in construction projects, the success in a to the local environment and business needs. POSCO E&C is also Fostering Global E&C Leaders project is most affected by the ability and leadership of project operating programs to enhance employees’ communication skills To foster global E&C leaders who are able to lead the future and managers. Our Site Manager Development Training programs and friendship with the locals. Fostering Future Management Leaders create a distinctive value based on pride and challenging spirit, contribute to fostering advanced project management capa- The Leadership Academy provides programs intended to help POSCO E&C is concentrating on strengthening core values, lead- bilities by providing theoretical overviews, case studies, field trips, employees to develop essential leadership skills. The Academy ership, job quality, and global competency. The company will and on-the-job training in the three core areas of site manage- allows employees to acquire the necessary skills and knowledge evolve into a global E&C company by systematically developing ment: organization, project, and external relations. before being promoted to the next position, thereby encourag- employee competency to lead the global market. ing them to become self-motivated and self-leading individuals. The prospective talents expected to perform core leadership Training Courses for New Employees roles within the company in the future are given opportunities POSCO E&C provides step-by-step training programs for new to develop the competencies that will be required of them in the employees with the aim of facilitating their early adaptation to future through e-learning programs, leadership certification tests, the company and development of their basic competencies. and action learning assignments. After receiving the New Employee Orientation during their first three years of employment, they are taken around different Annual Average Hours of Training per Employee (Unit: hours) departments, participate in project simulations and on-site internships, and give presentations on their research and analysis. 2010 68
These site- and practice-oriented courses are intended to help 2011 76 new employees develop their project competencies and acquire Completion Ceremony of the Site Manger Development Training Course Fostering Local Managers 2012 85 such global skills as proficiency in English and other languages 68 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 69
Fair Personnel Evaluation agement-related issues every quarter, improving employee welfare [ Improvement of Welfare Benefit System ] benefits, and seeking developmental alternatives for company Operating a Regular Performance growth, which contribute to strengthening the competiveness of Extension of maternity leave of spouse Working-hour reduction during parenting period Establishment of family care leave system Management System POSCO E&C and the rights and interests of employees. POSCO E&C has a fair and future-oriented performance manage- Maximum 90 days Working 40 hours ment model as well as a global HR system. Our performance man- a week agement is being conducted on a regular basis to prevent unfair 5 days practices and improve the fairness and feedback process. It is pre- pared to inspect and evaluate not only final performances but also Working 15 to 30 processes to reach the goal by regularly checking performances hours a week every six months and giving feedback to employees at each po- 3 days sition compulsory every quarter. The evaluation results are utilized to consistently improve performances beyond just rewarding such as promotion and payment changes, contributing to maximizing individual and organizational performances. The efficiency of the Labor-Management Council
regular performance management system is increased by provid- Before After Before After New establishment ing each department with independent workshop programs in- Management of Employee Health cluding the importance of performance management and setup POSCO E&C believes that the employees’ healthy lives are the very of individual goals in order to enhance performance management source of its competitiveness. To this end, the company offers vari- Supporting Preparation for Old Age 16 financial institutions since 2011, which are safely managed and capabilities. Since the introduction of the regular performance ous programs to improve employee health such as stop smoking, POSCO E&C operates a retirement pension plan to help employees paid. Currently, the company is operating the DB (Defined Benefit) management system, the appropriateness index on personnel sys- walking up and down the stairs, obesity control, and health festival. prepare for a happy and stable post-retirement phase. Through the pension plan that guarantees a fixed payment during retirement tem and promotion results has been improved, which is recognized Specialized and high-quality health and medical services in linkage retirement pension plan, employees’ severance payments are de- to ensure the stability in the pension payment in the initial period as a reliable personnel evaluation system. with local hospitals are also provided to employees. In 2012, POSCO posited in financial institutions outside the company and they can of the system. Considering the stability of the retirement pension E&C held a healthcare festival to expand the scope of the health receive severance payments in a lump sum or as pension upon re- system, the company plans to adopt the DC (Defined Contribution) Operating a Fairness Evaluation Index management program to its employees’ families, at which health tirement. POSCO E&C has been depositing severance payments to pension plan wherein employees can operate retirement assets. The fairness evaluation index is being operated for the right opera- counselors checked the health conditions of participants and gave tion of the regular performance management system. The fairness them healthcare methods. evaluation index is calculated by three categories: 1) compliance with the fairness in process, 2) faithfulness of contents, and 3) data analysis, monitoring, and survey on evaluators’ capability items, which is also utilized for the enhancement of evaluators’ capability. Opening of a Kids Daycare Center
Organizational Culture Improvement POSCO E&C opened the “For POSCO E&C Kidsvill” in its office building in Songdo in March 2013 in order to support employees’ parenting, childbirth, and harmonization between work and life in consideration of the increase of working couples. As the center is located within workplaces, our working couples can leave their children in the daycare facilities and even check on their children frequently. Since the pur- Maintaining Stable Labor-Management Relations pose of the center is to ease the parenting burden, enrollment into the center is very straightforward and the period of entrusted parenting is POSCO E&C maintains stable labor-management relations based on restricted to 2 years. The company expects the center to contribute to alleviating parenting burden, expanding more female employees, and mutual trust and communication. Employee conflicts, complaints, increasing the birthrate. and grievances are solved through the Labor-Management Coun- Consultations on healthcare of employees’ families cil and monthly meetings with employees. In addition, employees’ opinions are collected without filtering through on-site facilitators, Improvement of Welfare Benefits communication meetings between departments and an in-com- We improved the working environment and systems as part of our pany online bulletin board, and replies and treatments by relevant efforts to build a happy workplace. For the harmonization of work departments are regularly monitored for quick response. and life, maternity leave for spouses was expanded with a family care leave system, a work-hour reduction system during maternity Labor-Management Council to Build a leave, and childcare facilities were newly introduced. In addition, Healthy Company we operate the optional welfare system that enables employees The labor members of the Labor-Management Council is elected to optionally use welfare benefit programs within their allowable fairly and transparently through the e-voting system. The labor welfare points. Opened the “For POSCO E&C Kidsvill” Interior of the “For POSCO E&C Kidsvill” members are committed to discussing various pending labor-man- 70 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 71
Enhancement of customer value Fostering Global E&C Leaders Pursuit of Win-win Growth with SOCIAL CONTRIBUTION TO LOCAL and satisfaction Business Partners COMMUNITIES
[ Win-Win Growth System ] • Considering sustainability in • Building basis for fair trade contracting Major Performances in 2012 Pursuit of Win-win Growth with • Operating the Grievance Managing the • Expanding sustainability Treatment Center sustainability of assessment business partners Business Partners Ratio of e-Contract 100 % Building Pursuing true transparent Win-Win growth business Key Issue Major Activities in Future Plans with business part- relations 01 2012 02 03 ners through mutual Training Employees prosperity • Offering managerial and educational of SMEs 4,531persons • Fair trade • Building transparent business • Intensively managing major 3 support • Expanding sustainability relations contract-related ratios • Offering financial and technical Supporting management of business partners • Managing the sustainability of • Activating performance sharing support business Operation of a • Supporting and cooperating with business partners system • Operating the Win-Win Growth partners’ Win- Win-Win Growth business partners • Supporting business partners’ Win- • Reinforcing communication with Supporters Win growth Fund KRW billion Win growth business partners 52
* Major 3 contract-related ratios: ratio of competitive bidding, ratio of orders awarded to SMEs, and ratio of negotiated contracts for internal transactions
Considering the features of the E&C industry where various busi- Operating the Grievance Treatment Center Supporting Business Partners’ Win-Win Growth Offering Financial and Technical Supports ness partners are engaged, Win-Win growth with business partners An online reporting bulletin and the Grievance Treatment Center A Win-Win growth fund was raised under the business agreement not only improves our competitiveness but raises the value of the are being operated in order to receive reports on corruption and Win-Win Growth Supporters between POSCO E&C and Woori Bank in order to loan to recom- entire supply chain. POSCO E&C emphasizes transparent business unfair business practices by our employees and business partners. The Win-Win Growth Supporters is a program being operated at mended business partners by POSCO E&C at a prime rate. In 2012, relations with business partners and mutual growth with them by We also listen to inconveniences made by business partners and POSCO E&C, in which all executives assume responsibility for one- about KRW 47.0 billion loans were provided. In addition, we oper- focusing on managing their sustainability and supporting Win-Win quickly treat them for efficient and transparent procurement. to-one support to business partners. They visit business partners ated a performance sharing system to jointly create new values growth activities. The company will continue to support business every month to listen to difficulties and offer consultation services. and share them with business partners. Through the performance partners by establishing mid-and long-term plans for Win-Win Managing the Sustainability of Business Partners sharing system, business partners proposed tasks for cost reduction, growth. quality improvement, and brand value enhancement, and selected Contracting in Consideration of Sustainability tasks were jointly conducted by POSCO E&C and its business part- Building Transparent Business Relations POSCO E&C is committed to spreading ethical management to its ners. This system contributed to upgrading the profitability and business partners. They are asked to provide special documentation competitiveness for business partners as well as improving product Building Basis for Fair Trade on ethical behavior and safety and environmental management quality and cost reduction for POSCO E&C. POSCO E&C complies with four major guidelines for fair trade in plans at the time of contracting with us. Their sustainability in safety contracting, selecting and managing business partners, installing and environment is managed by mandating that they comply with [ Major Programs for Win-Win Growth ] and operating internal deliberation committees, and issuing and our regulations for safety and environment. preserving documents which are recommended by the Fair Trade • Win-Win growth fund • Special fund for Win-Win cooperation Win-Win Growth Supporters Financial support Commission. In addition, all procurement processes are conducted Assessing Sustainability of Business Partners • Network loan (Result: KRW 113.9 billion) by the e-contract system and the standardized contract is used for We strengthen the sustainability of our business partners by com- • Supporting technology development subcontracting, which enhances the fairness and transparency of prehensively assessing their quality, safety, and environmental man- Offering Managerial and Educational Supports funds businesses. agement levels. In 2012, we conducted assessments on 1,480 major POSCO E&C offers training and consulting services to small and business partners and built Win-Win growth relations with partners medium-sized business partners with weak managerial and edu- Technical support and • Transferring our patented technology protection (performance sharing system) Compliance Program who won superior grades by providing them with opportunities cational infrastructure. In 2012, the company provided 3,013 em- (Result: 35 cases of 50 business • Joint R&D The Compliance Program (CP) was introduced to POSCO E&C in to join our projects. The criteria for sustainability assessment will be ployees of small and medium-sized business partners who were 1st partners) • Joint registration and application of patents 2003 and it is being operated by the Ethics Group. The Board of Di- further tightened in order to figure out and continuously manage and 2nd vendors or subcontractors with training on management, rectors appoints the standing auditor as a responsible manager for risks in sustainability of business partners. leadership, and specialized technology to upgrade job capabilities Offering training and • Vocational trainings for SMEs and cultivate core talent. workforce the CP and examines the company’s policies and systems for fair (Result: trained 4,531 employees • Consultation on technologies trade through the Compliance Committee, which consists of the of partners, and sent 2,232 • Win-Win Growth Supporters POSCO E&C employees) heads of relevant departments. 72 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 73
Enhancement of customer value Fostering Global E&C Leaders Pursuit of Win-win Growth with SOCIAL CONTRIBUTION TO LOCAL and satisfaction Business Partners COMMUNITIES
[ Social Contribution System ] Conducting social contribution activities Major Performances in 2012 Social Contribution for local communities Incheon neighboring Employees’ volun- our sites to Local Communities Pohang tary donations KRW 343 million Pursuing a company to be Gwangyang Average hours of embraced by stakeholders volunteer work per Increasing synergy by creating a better living POSCO E&C employee hours through private- Busan 33.6 Key Issue Major Activities in Future Plans Volunteer Corps environment for sustain- public partnership 01 2012 02 03 able lives of marginalized Sites across the Awards in social Grand Prize in global social nation contribution contribution sector for 2 consecutive citizens years at the Forbes Korea Social • Establishing cordial relations with • Conducting social contribution • Expanding site-supporting social Contribution Awards local communities activities for local communities contribution activities at home and Overseas subsidiar- • Creating synergy in social neighboring our sites abroad Developing and ies and sites Ranked 1st in the construction contribution • Increasing synergy through private- • Maximizing synergy through sector at the Excellence in Social providing volunteer University Student • Building a culture for voluntary public joint activities private-public partnership programs Contribution sponsored by the social contribution activities • Operating a voluntary donation • Social contribution by the selection Volunteers Institute for Industrial Policy Studies system and concentration strategy
The corporate social value pursued by POSCO E&C is to build a forged one-to-one sisterhood relations between 50 local children’s Improving Living Environment Supporting Educational Facilities in world where everyone is happy through sharing and fulfillment. As centers and 50 departments of POSCO E&C. Since 2009, POSCO E&C has aided in papering walls and ceilings, Poor Regions Abroad a partner of local communities, POSCO E&C desires to be a com- and repairing floors and facilities by taking the advantage of the POSCO E&C has been building kindergartens and supported edu- pany supported and embraced by diverse stakeholders. To this end, characteristics of construction business for the underprivileged cational facilities in local communities neighboring its overseas the company conducts social contribution activities and operates class such as the disabled and multicultural families suffering from project sites in order to provide local children with educational the POSCO E&C Volunteer Corps (composed of more than 250 an inferior living environment. In particular, in 2012, the company benefits and contribute to the development of local communities departments and sites nationwide). In 2012, our employees spent implemented a pilot project for fire prevention of the underprivi- and communication with them. In 2012, the company assisted in re- about 140 thousand hours on volunteer services in an effort to par- leged people such as replacement of worn-out electric wiring and pairing facilities and building multimedia rooms for schools around ticipate in local communities. As a result, in 2012, we won the Grand installation of overload interruption devices and fire extinguish- its project sites in Vietnam and Indonesia. Prize in the global contribution sector of the Forbes Korea Social ers together with the National Emergency Management Agency Contribution Awards for two consecutive years. We also ranked 1st One & One Teaching (NEMA). POSCO E&C signed an MOU with NEMA to carry out the fire Year Country Supports Vietnam in the construction sector at the Excellence in Social Contribution prevention and improvement of living environment for the under- 2010 Building kindergarten Cambodia sponsored by the Institute for Industrial Policy Studies. Our employees visited local children’s centers with sisterhood re- privileged families more systematically. Cambodia lations to provide children with learning and cultural experiences Building kindergarten and donations of shoes and 2011 Vietnam Performance in Living Environment Improvement (Unit: households) blankets to the underprivileged families Promoting Representative Social as well as comfortable living environments by papering walls and Peru Contribution Activities ceilings and repairing floors and facilities. In addition, to encourage Supporting school renovation works, setting up 2010 65 pride in children’s minds and cultivate community awareness, we Vietnam multimedia rooms, and donating necessities to the underprivileged families POSCO E&C maintains amicable relationships with local communi- held a chorus tournament for local children’s centers in Incheon, 2011 74 2012 Chile Donating necessitates which garnered positive responses from local communities. ties and residents by promoting various social contribution activi- Indonesia Supporting school renovation work 2012 63 ties in many places at home and abroad utilizing the E&C industry’s Brazil Setting up multimedia rooms characteristics.
Supporting Local Children’s Centers (One & One) As a company representing Incheon, POSCO E&C is committed to supporting local children’s centers in order to contribute to the de- velopment of local communities and assist adolescents and chil- dren of low-income families. In October 2010, the company signed the “One & One Support agreement” to support local children
with Incheon Metropolitan City and ChildFund Korea Incheon and Chorus Tournament for Local Children’s Centers Improvement of Living Environment Donating Multimedia Devices in Indonesia 74 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 75
In Cambodia, POSCO E&C supported local students’ future dreams Cultural Sharing with Island Villages Voluntary Donation by Employees (Unit: KRW in millions) by holding a book report contest for them and donating translated POSCO E&C signed an MOU with the Korean Coast Guard to contin- world-renowned classics to local schools. ue to provide island villages with volunteer services such as cultural 2010 117 events and marine environmental cleanup. In 2012, the company 2011 209 Increasing Synergy in Social Contribution visited Jangbong Island and Deukjeokdo Island which were geo-
graphically alienated from cultural benefits and provided local peo- 2012 343 We strive to increase synergy in social contribution activities by uti- ple with joyful performances such as the Pungmul Band (Korean lizing the expertise and professionalism of diverse partner institu- traditional percussion band) and other musical acts. Other activities
tions to efficiently solve social problems. Together with the govern- included cultural assets protection in the region and reinforcement Starting Ceremony of a 2nd Round of Happy Builders ment, relevant institutions, and nonprofit organizations based on of trekking courses for tourists. In addition, Incheon Clean Ocean Supporting Multicultural Families MOUs, we implement tailored social contribution activities such Volunteer Service Group, organized at the POSCO Family level to Building a Culture of Voluntary Donation POSCO E&C has been committed to supporting multicultural families as improving living environment and diffusing Korean culture at conserve the oceanic ecosystem, implemented marine environ- since 2010 in an effort to create a healthy society in which diversity is home and abroad. mental cleanup activities and campaigns together with the Korean A culture of voluntary donation has been built at POSCO E&C. Since recognized. In 2012, the company launched the “POSCO Multicultural Coast Guard. 2009, our employees have participated in voluntary donation pro- Supporters” comprising of multicultural families in Incheon by utilizing Year Partner Institution Major Activities grams through the in-company integrated social contribution website funds raised from the 1% Sharing Fund of the POSCO Family. The POSCO Incheon Metropolitan Donating Necessities to Marginalized People and the donations have been delivered to individuals in Haiti, Chile, Multicultural Supporters participated in the Yeosu Expo to promote the Supporting children and adolescents of low- 2010 City and ChildFund income families in the region Together with the Korea Disaster Relief Association, POSCO E&C has and Japan who have suffered from earthquakes and food supply dis- Incheon Asian Games 2014. The company also provided multicultural Korea Incheon donated necessaries to marginalized people around its overseas turbances. We have provided employees with coin banks at the begin- families with free medical services through a mobile clinic center and Conducting volunteer medical services for local 2011 Inha University Hospital communities project sites since 2011. The company delivered relief goods includ- ning of each year and promoted a campaign to donate spare change operated the Asia Zone at the Good Market, Incheon’s representative civil festival. This festival contributed to improving the awareness of the Korea Disaster Relief for Donating necessities to the needy around over- ing blankets, shoes, daily necessities, and clothes to low-income whenever possible. Funds which were raised from the coin banks and Association seas construction sites families in Vietnam and Chile. the campaign have been used for medical expenses for low-income citizens of Incheon about multicultural families. In 2013, lectures on the qualification exam and nail art to increase their job competency will be Incheon Free Economic Implementing social contribution and voluntary families in Incheon. In addition, we have spent funds raised from the Zone Authority work for local communities opened in order to support settlement in Korea and economic inde- campaign for executives to share 1% of their salary at the POSCO 2012 Implementing social contribution and voluntary pendence. Volunteer services together with employees of the POSCO work for local communities Family level on offering financial support to multicultural families and Korea Coast Guard Family will be promoted as well. (Environmental cleanup in the sea and cultural building public facilities by utilizing steel houses for them. In 2013, the events on the islands) target of the campaign to share 1% of salary will be extended to all Ministry of Culture, Diffusing Korean culture and establishing multi- Sports & Tourism media rooms employees for the activation of the in-company sharing culture.
Diffusing Korean Culture and Improving Educational Environment Since signing an MOU with the Ministry of Culture, Sports & Tour- Delivering Relief Goods in Chile ism, POSCO E&C has promoted the diffusion of Korean Culture to the world and an improvement of the local educational environ- Happy Builders, POCO E&C’s Global University ment, in which POSCO E&C’s global university student volunteer Student Volunteer Corps corps “Happy Builder” has participated. In July 2012, the company Happy Builders, a global university student volunteer corps, had repaired schools in 3 villages in Cilegon, Indonesia, where the in- been launched with the purpose of encouraging warm-hearted Voluntary Donation by Employees POSCO’s Multicultural Supporters tegrated steel mill project site was located, and then held a culture leadership in 2011. We chose a second round of Happy Builders in exchange festival. The festival included the Nanta performance and 2012 and the students participated in various volunteer services in- K-POP dances, which was a good opportunity for the company to cluding improving living environment of multicultural families and INTERVIEW harmonize with local people. In November 2012, medical volunteer underprivileged people, holding the Architecture Challenge Camp We know POSCO E&C, as a global company, has contributed to local communities through global social activities. services were carried out jointly with Inha University Hospital in 5 to aid creativity development and career selection of low-income We give you a round of applause for your efforts. The Korea Foundation for International Culture Exchange (KOFICE) villages in Dong Nai Province and building multimedia rooms at children, and cultural performances in island villages of Incheon. together with POSCO E&C makes an effort to narrow the emotional gap from local citizens and communicate regional high schools and exchanging culture with local people They also delivered a warm heart to globally by being proactive with them. Our activities are extended to the creation of opportunities for bilateral culture exchange and cultural were also conducted. In December 2012, the company built mul- in diffusing Korean culture and participating in medical volunteer experience with local families beyond just the improvement of the regional environment or infrastructure timedia rooms at schools in Ceara Province, Brazil, where the CSP services in Indonesia and Vietnam. development. We hope POSCO E&C communicates globally and becomes a company to be embraced by them. steel plant site was located, and had a culture exchange festival with Park, Jong-Sup / Dept. Manager of Planning and Management Division, KOFICE the locals. 76 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 77
Thanks-Sharing to Enhance Safety at Project Sites tation or a report, and sending mes- Special Page The Thanks-Sharing of POSCO E&C is promoted in line with safety sages for 100 thanks cases. Moreover, activities at project sites considering the characteristics of the E&C the CEO transmitted text messages business. Delivering a sense of thanks to site workers inspires them of thanks to all employees on Labor Thanks-Sharing and a Company to Be Embraced to have ownership and voluntarily practice safety. Our major Thanks- Day and employees sent reply mes- Sharing activities include welcoming attitude to workers at the time sages to the CEO. These activities are Meaning of Thanks-Sharing them recognize their value of existence and enhance safety. of their arrival to the site, starting meetings with an expression of expected to stimulate the settlement The Thanks-Sharing is an activity for the POSCO Family to become At project sites, workers receive expressions of thanks at the main thanks in the case of onsite daily safety inspection meetings (TBM: of the Thanks-Sharing and the estab- a company that will be embraced by stakeholders. Through the gate when they come to work every morning. Expressing thanks to tool box meeting), and improving convenience facilities for workers. lishment of a creative working envi- Thanks-Sharing, our employees deliver thanks to family members, workers helps them recognize their value of existence and enhance It is also participated by our business partners and their employees ronment within the company. Poster to Pledge the colleagues, and stakeholders, which ensure mutual trust. Particu- safety. Management’s Commitment to within project sites, and the improvement of convenience facilities larly, delivering thanks to workers at project sites contributes to Thanks-Sharing elevates the satisfaction of site workers. The Thanks-Sharing is be- Easy and Joyful Events for Employees inbreathing the sense of ownership and further practicing safety Future Plan ing adopted by all domestic project sites after conducting model POSCO E&C has held various Thanks-Sharing events wherein all em- management. The Thanks-Sharing is embedded in our company as POSCO E&C intends to make the Thanks-Sharing a sustainable cor- operations at several project sites in March 2013. ployees can participate. The Thanks Board event was one of those, a culture of sustainability management that reflects the character- porate culture, not just a temporary event. To this end, the company through which a big thanks-related image was completed by at- istics of E&C business. will focus on the settlement of the “Thanks-Sharing 1.1.1 Campaign,” taching stickers with written messages of thanks of employees on activation at project sites, and expansion into overseas sites. the board like a puzzle. The image was completed by 875 messages Practicing Thanks-Sharing written by employees at Songdo office building for a month. The For the settlement and expansion of the Thanks-Sharing, POSCO board is currently exhibited at the lobby on the first floor of the of- E&C promotes “Thanks-Sharing 1.1.1 Campaign” which means ver- fice building. It serves as a good opportunity to let our employees bally expressing thanks once a day, sending a message of thanks and stakeholders know about the Thanks-Sharing of POSCO E&C. once a week, and sending a letter of thanks once a month. This campaign is being established as a corporate culture thanks to voluntary active participation from the employees. At project sites, workers receive expressions of thanks at the main gate when they Hug of Thanks on the Way to Work come to work every morning. Expressing thanks to workers helps
Thanks-Sharing 1.1.1 Campaign
The “Thanks-Sharing 1.1.1 campaign” is POSCO E&C’s unique sustainability activity to mutually share appreciation daily, weekly, and monthly. This campaign is being promoted as our core activity to make thanks-sharing a daily habit. Thanks-Sharing Board at Songdo Office Building
Publication of a Book Containing 100 Thanks Cases of New Employees
Management Leads Thanks-Sharing It is believed that management’s interest and engagement are Sharing a thing of thanks Sending a message of thanks Sending a letter of thanks once a day once a week once a month most important for the settlement of Thanks-Sharing. Through the implementation of the Thanks-Sharing 1.1.1 Campaign, we foster a This is an activity wherein all participants Based on sharing a thing of thanks once a This is an activity to deliver mutual thanks culture wherein management takes the initiative in its practice. The share a thing of thanks once a day during day, employees send a message of thanks through letters. Employees’ letters are col- VP time. The objects of thanks include all the once a week to those whom they want to lected and sent once a month through post management participated in 4 major activities: sending a message relevant people in daily life such as himself/ express appreciation. boxes installed at the main office building in of thanks or complement to affiliated employees through letter, herself, colleagues, company, and customers. Songdo and regional offices. messenger, or e-mail once a month, sharing thanks before starting the meeting, complimenting an employee who finished a presen- l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 79
Financial Information (As of IFRS standard)
(Unit: Korean Won) appendix Item December 31, 2012 December 31, 2011 Assets Ⅰ.Current assets 7,431,661,572,870 6,429,319,303,042 Cash and cash equivalents 954,069,813,437 1,043,838,944,693 Trade receivables 1,868,336,452,908 1,604,997,999,993 Other financial assets 555,632,254,290 445,698,469,360 Unclaimed construction property 1,892,632,960,196 1,425,478,537,566 Inventories 1,260,848,092,450 1,209,498,579,170 Current income tax assets 6,260,207,822 7,070,583,336 Other current assets 893,881,791,767 692,736,188,924 Ⅱ. Non-current assets 1,769,101,788,882 1,404,537,901,698 Investments in associates 113,714,140,312 178,976,910,888 Non-current trade receivables 1,419,986,358 703,387,501 Other non-current financial assets 441,633,530,096 322,831,183,999 Tangible assets 400,014,289,351 122,213,970,380 Investments in real estate 272,281,713,952 282,941,511,988 Intangible assets 306,145,086,192 296,665,798,905 Deferred income tax assets 223,388,521,482 190,230,189,493 Other non-current assets 10,504,521,139 9,974,948,544 Total assets 9,200,763,361,752 7,833,857,204,740 Liabilities Ⅰ.Current liabilities 4,969,750,155,983 4,058,850,387,710 Trade payables 1,502,717,886,352 1,095,491,440,854 Borrowings 547,986,048,104 354,066,408,762 Other financial liabilities 542,438,364,463 442,170,126,012 Prepaid construction property 372,479,969,414 279,946,583,856 Current income tax liabilities 82,583,178,959 67,753,623,542 Other current liabilities 1,895,725,651,777 1,794,017,811,249 Provisions 25,819,056,914 25,404,393,435 Ⅱ.Non-current liabilities 1,402,228,592,030 1,189,973,638,396 Non-current borrowings 914,712,373,583 1,010,752,818,192 Other non-current financial liabilities 54,708,041,242 59,541,535,404 Retirement benefit liabilities 45,047,660,616 36,195,997,502 Other non-current liabilities 312,668,425,952 1,496,250,000 Provisions 61,160,580,973 67,368,716,999 Deferred income tax liabilities 13,931,509,664 14,618,320,299 Financial Information 79 Total liabilities 6,371,978,748,013 5,248,824,026,106 Equity Organization Chart 80 Ⅰ.Equity attributable to the owner of the parent 2,786,432,584,408 2,536,249,507,808 Award & Association Membership 81 Issued capital 183,615,000,000 183,615,000,000 Capital surplus 761,864,652,020 754,754,819,664 GRI G3.1 Index 82 Reserves (45,724,310,781) (19,344,207,313) Statement of Third-Party Assurance 88 Retained earnings 1,886,677,243,169 1,617,223,895,457 Ⅱ.Non-current interests 42,352,029,331 48,783,670,826 Statement of Assurance Report of Greenhouse Gas Emissions 90 Total equity 2,828,784,613,739 2,585,033,178,634 Total liabilities and equity 9,200,763,361,752 7,833,857,204,740 UN Global Compact 91 Glossary 92 80 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 81
(As of IFRS standard) Awards & Association Membership
Consolidated statements of comprehensive income (Unit: Korean Won) Awards for Achievements in Sustainability Management in 2012
Item December 31, 2012 December 31, 2011 Date Award Title/Description Awarded by Sales 8,637,326,947,677 7,507,594,972,430 March Grand Prize in Plant Engineering Sector, 2012 Overseas Construction Competition (Kallpa Combined Cycle Conversion) Moneytoday Grand Prize, 12th fn Housing and Construction Power Brand Competition Financial News Cost of sales (7,881,269,967,883) (6,779,828,059,874) May Minister’s Prize of the Ministry of Construction, Vietnam (Hanoi Metropolitan City Master Plan, Vietnam) Vietnamese Government Gross profit 756,056,979,794 727,766,912,556 Grand Prize in Wellbeing Apartment Sector, 1H 2012 Hankyung Housing Culture Competition (The Sharp Harbor View II in Songdo) Korea Economic Daily Administrative expenses (370,997,584,252) (363,322,616,635) July Grand Prize in Residential-Commercial Apartment Sector, 16th Most Livable Apartment Competition (The Sharp Central City in Seo-myeon, Busan) Maeil Business Newspaper Selling and logistics expenses (59,503,049,355) (70,888,775,368) Grand Prize in Landscape Sector, 2012 Eco-friendly Construction Competition (The Sharp Green Work I & II in Songdo) Joong-Ang Ilbo Operating profit 325,556,346,187 293,555,520,553 August Minister’s Prize of the Ministry of Land, Transport and Maritime Affairs, 2012 Luxury Housing Competition (The Sharp Green Avenue in Songdo) Moneytoday Gain (loss) on investments in associates, net (33,340,149,910) (36,503,513,725) Minister’s Citation of the Ministry of Knowledge Economy in the Green Productivity Sector, 36th National Productivity Competition Ministry of Knowledge Economy Financial income (loss), net 77,739,782,679 (127,098,726,034) Excellent Company Prize, 2012 Korea’s Win-Win Conference (E&C Sector) Hankook Ilbo September Financial income 349,142,533,238 158,322,746,631 Ranked 1st in the Apartment Service Sector, KS-QEI (4 Consecutive Years) Korea Standards Association th Financial costs (271,402,750,559) (285,421,472,665) Grand Prize in the Plant Sector, 7 Asia Construction Awards (Kallpa Combined Cycle Conversion) Asia Economic Daily Other non-operating income (loss), net 14,053,297,723 10,249,076,456 Received the Friendship Insignia Vietnamese Government Other non-operating income 62,999,672,770 93,026,882,021 Grand Prize in the New and Renewable Energy Sector, 2012 Korea Environmental Friendliness Awards (6 Consecutive Years) KEFA Committee Grand Prize in the E&C Sector, 12th Daily UNN Awards Daily UNN Other non-operating costs (48,946,375,047) (82,777,805,565) October th Korean Institute of Landscape Profit before income tax Minister’s Prize in the Private Ecologic Landscape Sector, 6 Korean Landscape Architectural Award 384,009,276,679 140,202,357,250 Architecture Income tax expense (104,476,476,303) (12,015,091,100) Excellent Brand Prize, 4th Asia Today’s Green Construction Awards Asia Today Net income for the year 279,532,800,376 128,187,266,150 Grand Prize in the Housing Sector, 3rd Korea Green Construction Awards (The Sharp Master View in Songdo) Seoul Shinmun Other comprehensive income (loss), net (37,671,110,705) (32,656,679,171) Grand Prize in the City Development Sector, Korea Civil Engineering Technology Awards (Daegu Esiapolis) Maeil Business Newspaper November Grand Prize in the Domestic Plant Sector, Korea Construction Industry Awards 2012 Net gain on available-for-sale financial investments (5,007,831,576) (21,432,552,131) e-Daily (LNG Combined Thermal Power Plant Unit 5 & 6 of POSCO Energy) Equity adjustments in equity method (3,618,817,374) (2,190,447,552) Grand Prize in the Technology Innovation Sector, 2012 Korea’s Flagship Apartment Awards (The Sharp Green Avenue in Songdo) WOW TV Exchange differences on translation of foreign operations (19,821,609,119) (1,706,350,337) Grand Prize, Hankyung Living Environment Awards in 2H 2012 (Esiapolis Sharp) Korea Economic Daily Actuarial loss on defined benefit plans (9,222,852,636) (7,327,329,151) Grand Prize in the Webzine Sector, Web Award Korea 2012 (Webzine The Sharp Life) Web Award Committee December Total comprehensive income for the year 241,861,689,671 95,530,586,979 Award in the Green Energy Housing Sector, 2012 Herald Economic Daily’s Green Living Culture Awards Herald Corporation Net income attributable to: Grand Prize in the E&C Sector, Green Reputation Awards Chosun Biz The owner of the parent 289,260,849,854 121,661,551,525 Non-controlling interests (9,728,049,478) 6,525,714,625 Association Membership for Sustainability Management Total comprehensive income attributable to: The owner of the parent 253,741,712,852 89,138,196,654 Stake at Concern Organization Reason for Joining Non-controlling interests (11,880,023,181) 6,392,390,325 Korea Construction Quality Research Center To exchange information with fellow E&C companies. Earnings per share of the owner of the parent Customer Korea Construction Quality Association To promote improvement in quality and competitiveness of the Korean construction industry. Basic and diluted earnings per share 7,877 3,313 Korea Standards Association To obtain information on standards applicable to the construction industry (standardization and quality assurance). Labor Relations Pohang-East Gyeongbuk Executives Association To exchange information on labor unions and relations in the construction industry. Construction Safety Managers Association To promote exchange among safety managers at the 100 largest construction companies. Construction Safety Management Council To promote exchange among the heads of safety departments at the 100 largest construction companies. Safety and Health KOSHA 18001 Council To promote exchange of information among the KOSHA18001-certified construction companies. Organization Chart (As of July 2013) To promote exchange of information and policy suggestions among large construction companies regarding Construction Safety Executives Council safety issues. Institute of Internal Auditors To understand trends in internal auditing and promote networking among auditors. CEO Ethics Management Fair Competition Federation To exchange information on fair trade policies and related laws. Gwangyang Police Administration Advancement Committee To obtain information on local society and maintain cooperation with the police stations within the jurisdiction. Corporate Audit Department Gwangyang Self-Administration Forum To contribute to local development and promote mutual understanding. Local Community Saeul Foundation of Culture To maintain relations with opinion leaders of Incheon. Pohang Local Development Council To maintain relations and information infrastructure with leaders of Pohang. Plant Engineering & Energy Engineering & Civil & Environment Domestic Business Brazil CPS Business Unit Architecture Division Construction & Environment Association To exchange information on environmental technologies and regulations. Construction Division Construction Division Division Department Maekyung Safety & Environment Institute (SEL Club) To exchange information on safety and environmental policies. Korea Society of Water Environment To exchange information on water quality control, waterworks, sewage, etc. Environment Korea Society of Waste Management To seek consultation on how to reduce or recycle waste material from thermal-decomposition incinerators. General Administration Global Marketing Division Strategic Planning Division R&D Center To exchange information on the latest environmental engineering technology and environmental preservation Division Korea Society of Environmental Engineers measures. Korea New & Renewable Energy Association To exchange information and relations on new and renewable energy projects. 82 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 83
GRI G3.1 Index
●Reported ◐ Partially Reported ○Not Reported ●Reported ◐ Partially Reported ○Not Reported
Indicator Description ISO 26000 Status Page Remarks Indicator Description ISO 26000 Status Page Remarks I. Strategy and Analysis 4.11 Whether and how the precautionary approach or principle is addressed by the organization ● 11 1.1 Statement from most senior decision-maker in organization 6.2 ● 4, 5 4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives ● 91 1.2 Description of key impacts, risks, and opportunities 6.2 ● 4, 5 II. Organizational Profile 4.13 Membership in associations and/or national/international advocacy organizations ● 81 2.1 Name of organization ● 6 4.14 List of stakeholder groups engaged by the organization 6.2 ● 16~17 2.2 Primary brands, products, and/or services ● 6, 7 2.3 Operational structure 6.2 ● 80 4.15 Bases for identification and selection of stakeholders with whom to engage ● 16~17 2.4 Location of organization’s headquarters ● 94 Approaches to stakeholder engagement, including frequency of engagement by type and 4.16 ● 16~19 2.5 Location of overseas branch offices and sites ● 6, 7 stakeholder group
Shareholder Relation Kind of Share Ownership 4.17 Key topics and concerns raised through stakeholder engagement, and responses to them ● 16~19 POSCO Parent company Common 89.53 Economic Performance Indicators POSTECH Non-profit Common 2.36 6.8, 6.8.3, Treasury Share Employee Common 3.83 EC1 Direct economic value generated and distributed ◐ 6, 73 2.6 Nature of ownership and legal form ● 82 6.8.7, 6.8.9 Minority - Common 4.28 Common 100 EC2 Financial implications and other risks and opportunities for organization’s activities due to climate change 06.5.5 ◐ 55 A total of KRW 105.7 billion is being operated, accounting for 85.04% Total Preferred 0 EC3 Coverage of organization’s defined benefit plan obligations ● 69 of total amount of retirement pension. Others 0 EC4 Significant financial assistance received from governments ● 83 No government subsidy 2.7 Markets served ● 6, 7 Range of ratios of standard entry-level wages compared to local minimum wage at significant EC5 6.4.4, 6.8 ● 83 314% compared to local legal minimum wage 2.8 Scale of the reporting organization ● 6, 7 locations of operation Policy, practices, and proportion of spending on locally-based suppliers at significant locations of 6.6.6, 6.8, EC6 ● 29 2.9 Significant changes during reporting period regarding size, structure, or ownership ● 8, 9, 10 operation 6.8.5, 6.8.7 2.10 Awards received in reporting period ● 81 Our local subsidiaries, branches, and project sites preferentially hire lo- Procedures for local hiring and proportion of senior management hired from the local 6.8, 6.8.5, cal employees including the pursuit of localization of manager levels. EC7 ● 30 III. Report Parameters community at significant locations of operation. 6.8.7 Domestically, we hire about 30% of new graduate employees from 3.1 Reporting period ● 2 local universities. 6.3.9, 6.8, 3.2 Date of most recent previous report (if any) ● 82 Published the first SR report in 2012 Development and impact of infrastructure investments and services provided primarily for public 6.8.3, 6.8.4, EC8 ● 31, 72~75 3.3 Reporting cycle (annual, biennial, etc.) ● 82 Every year benefit through commercial, in-kind, or pro bono engagement 6.8.5, 6.8.6, 6.8.7, 6.8.9 3.4 Contact point for questions regarding the report or its contents ● 2 6.3.9, 6.6.6, 3.5 Process for defining report content ● 18, 19 6.6.7, 6.7.8, 3.6 Boundaries of report ● 2 EC9 Understanding and describing significant indirect economic impacts 6.8, 6.8.5, ● 26~31 6.8.6, 6.8.7, 3.7 State any specific limitations on the scope or boundary of report ● 2 6.8.9 3.8 Basis for reporting on comparability from period to period and/or between organizations ● 2 Environmental Performance Indicators 3.9 Data measurement techniques and bases of calculations for data, including performance index ● 2 Item Unit 2010 2011 2012 Explanation of the effects of & reasons for any re-statements of information provided in earlier Steel reinforcement 234,116 163,091 219,508 3.10 ● 2 reports Cement ton 1,791,570 170,051 114,966 EN1 Materials used by weight or volume ● 83 Ascon 111,477 100,832 187,722 3.11 Significant changes from previous reporting periods applied in the report ● 2 Remicon) 306,869 1,581,160 1,711,000 3.12 Table identifying the location of the Standard Disclosures in the report ● 82~87 Sand m3 22,294,708 2,189,467 115,552 Gravel 533,945 6,574,584 138,077 3.13 Policy and current practices with regard to seeking external assurances for the report 07.5.3 ● 2, 88~89 Item Unit 2010 2011 2012 IV. Governance, Commitments, and Engagement EN2 Percentage of materials used that are recycled input materials ● 83 Green purchase Unit 68,767 75,908 78,803 4.1 Governance of organization ● 12 4.2 Indicate whether the Chair of the highest governance body is also an executive officer ● 12 Item Energy source Unit 2010 2011 2012 6.5, 6.5.4 Number of members of highest governance body that are independent and/or non-executive Gasoline 34 37 18.91 4.3 ● 12 members EN3 Direct energy consumption by primary energy source ● Diesel 27 41 32.77 Scope 1 Kerosene 15 38 50.99 Mechanisms for shareholders and employees to provide recommendations or directions to 4.4 ● 12 LPG - - 1.40 highest governance body LNG 11 13 12.43 4.5 Compensation for members of highest governance body, senior managers, and executives ● 12 83 Electricity 199 545 52.66 6.2 Scope 2 TJ 4.6 Processes in place for highest governance body to ensure conflicts of interest are avoided ● 12 Hot water - - 35.36 Electricity of partners - - 21.38 Process for determining the qualifications and expertise of the members of the highest 4.7 ● 12 Diesel of partners - - 1,325.94 governance body EN4 Indirect energy consumption by primary energy source ● Scope 3 Gasoline of partners - - 20.31 4.8 Internally developed statements of mission or values, codes of conduct, and principles ● 12 Kerosene of partners - - 21.67 Procedures of highest governance body for management of economic, environmental, and LPG of partners - - 5.07 4.9 ● 12 social performances 4.10 Processes for evaluating highest governance body’s own performance ● 12 CRE1 Building energy intensity 6.5, 6.5.4 ● 83 4,247 (Kwh/person), as of the headquarters in Songdo, 84 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 85
●Reported ◐ Partially Reported ○Not Reported ●Reported ◐ Partially Reported ○Not Reported
Indicator Description ISO 26000 Status Page Remarks Indicator Description ISO 26000 Status Page Remarks EN5 Energy saved due to conservation and efficiency improvements 6.5, 6.5.4 ◐ 54 Labor Practices and Decent Work Performance Indicators Initiatives to provide energy-efficient or renewable energy based products and services, and 20~25, EN6 ● Item Unit 2010 2011 2012 reductions in energy requirements as a result of these initiatives or services more widely used 41, 54 Total employees* 3,535 3,925 4,297 EN7 Initiatives to reduce indirect energy consumption and reductions achieved 54 Full-time 3,052 3,370 3,599 ● Employment type Contract 483 555 698 Item Unit 2010 2011 2012 Male 3,367 3,734 4,060 Gender Waterworks - 725,943 617,051 Female 168 191 237 Persons EN8 Total water withdrawal by source ● 84 Groundwater - 299,161 269,244 Disables 43 44 54 Ton LA1 Total workforce by employment type, employment contract, and region 6.4, 6.4.3 ● 85 Minority 6.5, 6.5.4 Recycled water - 17,122 19,222 Veterans 92 93 115 Under 30 576 624 805 Total consumption - 1,042,226 905,517 Age 30 to 50 2,507 2,756 2,885 CRE2 Building water intensity. ● 84 21.9 (Ton/person), as of the headquarters in Songdo 50 and higher 452 545 607 Each site is managing water quality and wastewater treatment facili- * Excluding the number of executives EN9 Water sources significantly affected by withdrawal of water ● 84 ties in accordance with standards which was established to reduce ** Number of executives: 2010 (49 persons), 2011 (78 persons), 2012 (75 wastewater discharge. persons) EN10 Percentage and total volume of water recycled and reused ● 84 Location and size of land owned, leased, managed in, or adjacent to protected areas and areas of EN11 ● 53 Item Unit 2010 2011 2012 high biodiversity managed by us LA2 Total number and rate of employee turnover by age group, gender, and region ◐ 85 Unemployed Persons 138 168 182 Description of significant impacts of activities, products, and services on biodiversity biological EN12 ● 53 Turnover rate % 3.9 4.3 4.2 diversity EN13 Habitats protected or restored 6.5, 6.5.6 ● 53 Welfare Benefit System EN14 Strategies, current actions, and future plans for managing impacts on biodiversity ● 53 Item System Number of IUCN Red List species and national conservation list species with habitats in areas Leisure Recuperation center Childbirth Childcare leave, paternity leave, and maternity leave EN15 affected by operations, by level of extinction risk and the government and living in the areas ◐ 53 and mater- affected by our business activities Childbirth gift nity care Item Unit 2010 2011 2012 Financial Loans for living assistance Scope 1 5,609 8,421 7,725 assistance EN16 Total direct and indirect greenhouse gas emissions by weight ● 84 Scope 2 9,861 26,757 27,281 tCO Medical expenses 2 8,947* Medical Scope 3 - - Provision of compensation during the leave of (107,364)** 6.4, 6.4.3, support 6.5, 6.5.5 LA3 Benefits provided to full-time employees that are not provided to temporary employees ● 85 absence by injury or disease * Other indirect emissions were calculated since the system operation, hence 6.4.4 Assistance of educational expenses for children referred to one month in December 2012. Assistance of nursery school and preschool ** Scope3 figure in 2012 was estimated by verified emissions during one month in Optional EN17 Other relevant indirect greenhouse gas emissions by weight ● 84 January 2012. (Emissions for the year = verified emissions during one month * 12) expenses benefits *** GHG emissions data in this report covered the domestic 134 construction sites Assistance of expenses for self-development and 4 buildings. GHG emissions Data of 2010 and 2011 were calculated internally. Welfare card
CRE3 Greenhouse gas emissions intensity from buildings ● 84 3.70 (tCO2 /person), as of the headquarters in Songdo Assistance of family events CRE4 Greenhouse gas emissions intensity from new construction and redevelopment activity. ◐ 55 Assistance of funeral supplies EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 6.5, 6.5.5 ● 54 Others Compensation for non-business accidents EN19 Emissions of ozone-depleting substances by weight ● 84 N/A Transportation expenses to visit family members EN20 NOx, SOx, and other significant air emissions by type and weight ● 84 N/A Flexible workplace 6.3.10, 6.4, Item Unit 2010 2011 2012 POSCO E&C protects employees’ rights in accordance with the law EN21 Total water discharge by quality and destination ◐ 84 LA4 Percentage of employees covered by collective bargaining agreements 6.4.3, 6.4.4, ◐ 85 6.5, 6.5.3 Wastewater discharge Ton 365,854 292,683 and operates labor-management council and labor union. 6.4.5 Item Unit 2010 2011 2012 The company’s management issues are presented to the labor- EN22 Total weight of waste by type and disposal method ◐ 84 Waste generation Ton 897,010 946,035 610,312 management council every quarter. Issues closely related to labor 6.4, 6.4.3, Rate of recycling % 53 76 LA5 Minimum notice period(s) regarding significant operational changes ◐ 85 condition or items requiring employees’ opinions are regularly 6.4.4, 6.4.5 EN23 Total number and volume of significant spills ● 84 There was no significant spill during the reporting period informed to and discussed with the representative body composed of employees. Weight of transported, imported, exported, or treated wastes deemed hazardous under the terms 6.5, 6.5.3 EN24 ● 84 There was no violation of the Basel Convention Percentage of total workforce represented in formal joint management-worker health and safety Labor-management council representing executives and employees of the Basel Convention Annex I, II, III, and VIII Annex of Basel Convention LA6 ◐ 85 is being held once a quarter. Identity, size, protected status, and biodiversity value of water bodies and related habitats committee 6.4, 6.4.6 EN25 ◐ 53 significantly affected by the reporting organization’s discharges of water and runoff. LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities ◐ 56~59 We manage soil pollution by inspecting the level of soil pollution in Our HSE management system obtained KOSHA 18001 (domestic Land and other assets remediated and in need of remediation for the existing or intended land Percentage of the organization operating in verified compliance with an internationally CRE5 6.5, 6.5.4, ◐ 84 the construction sites. If soil was polluted, we carry out cleaning activi- CRE6 ● 85 standards) and OHSAS 18001 (international standards) in 2003. These use according to applicable legal designations. recognized health and safety management system. 6.7.5 ties in accordance with the purification plans. standards are applied to all construction sites. Initiatives to mitigate environmental impacts of products and services, and extent of impact 6.4, 6.4.6, EN26 ● 23~24 Education, training, counseling, prevention, and risk-control programs in place to assist workforce mitigation LA8 6.8, 6.8.3, ● 68 members, their families, or community members regarding serious diseases. EN27 Percentage of products sold and their packaging materials that are reclaimed by category ● 84 N/A 6.8.4, 6.8.8 Monetary value of significant fines and total number of non-monetary sanctions for POSCO E&C and its labor union have not concluded an independent EN28 6.5 ● 52~53 noncompliance with environmental laws and regulations LA9 Health and safety topics covered in formal agreements with labor unions 6.4, 6.4.6 ● 85 agreement on health and safety. However, we discuss health and POSCO E&C encourages all traveling employees to be more conscious safety items with each other in case of collective agreements. Significant environmental impacts of transporting products and other goods and materials used 6.5, 6.5.4, of the environment by converting the travel distances and expenses EN29 ● 84 LA10 Average hours of training per year per gender and employment type 6.4, 6.4.7 ● 66 for the organization’s operations and transporting members of the workforce 6.7.5 involved in each business trip into the carbon emission prices and Programs for skills management and lifelong learning for continued employability and managing 6.4, 6.4.7, publicly posting the results. LA11 ● 69 EN30 Total environmental protection expenditures and investments by type 6.5 ● 84 We invested KRW 3.01 billion in environmental R&D career endings 6.8.5 86 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 87
●Reported ◐ Partially Reported ○Not Reported ●Reported ◐ Partially Reported ○Not Reported
Indicator Description ISO 26000 Status Page Remarks Indicator Description ISO 26000 Status Page Remarks 6.6, 6.6.7, Item Unit 2010 2011 2012 SO9 Operations with significant potential or actual negative impacts on local communities ● 53 LA12 Percentage of employees receiving regular performance and career development reviews 6.4, 6.4.7 ● 85 Performance evaluation 6.8.7 % 78% 88% 81% Ratio of target employees Prevention and mitigation measures implemented in operations with significant potential or SO10 ● 31 actual negative impacts on local communities. Composition of governance bodies and breakdown of employees per category by indicators of 6.3.7, 6.3.10, LA13 ● 12 The BOD is comprised of 10 members (male). Number of persons voluntarily and involuntarily displaced and/or resettled by development, diversity 6.4, 6.4.3 CRE7 ◐ 31 broken down by project 6.3.7, 6.3.10, There is no difference in basic salary between new male and female LA14 Ratio of basic salary of men to women by employee category ● 86 Product Responsibility Performance Indicators employees. 6.4 6.3.9, 6.6.6, Life cycle stages in which health and safety impacts of products and services are assessed, and Item Unit 2010 2011 2012 PR1 6.7, 6.7.4, ◐ 62~65 percentage of significant products and services subject to such procedures LA15 Return to work and retention rates after parental leave 6.4.3, 6.4.4 ● 86 Use of childcare and maternity leave 75 100 100 6.7.5 % Total number of incidents of non-compliance with regulations and voluntary codes concerning Rate of return after the leave 100 100 100 PR2 ● 62~65 health and safety impacts of products and services during their life cycle, by type of outcomes Human Rights Performance Indicators 6.7, 6.7.3, Percentage and total number of significant investment agreements that include human rights 6.3, 6.3.3, PR3 Type of product and service information required by procedures 6.7.4, 6.7.5, ● 62~65 HR1 ◐ 14 clauses 6.3.5, 6.6.6 6.7.6, 6.7.9 6.3, 6.3.3, Type and number of sustainability certification, rating and labeling schemes for new construction, Percentage of significant suppliers and contractors that have undergone screening on human CRE8 ● 23, 40~43 HR2 6.3.5, 6.4.3, ◐ 14 management, occupation and redevelopment rights 6.6.6 6.7, 6.7.3, POSCO E&C stimulates fair transactions through specialized educa- Total number of incidents of non-compliance with regulations and voluntary codes concerning We regularly conduct educations on the prevention of sexual harass- PR4 6.7.4, 6.7.5, ● 87 tions. There was no penalty or restriction by violating the labeling product and service information and labeling ment in the workplace. 6.7,6, 6.7.9 related laws. Total hours of employee training on policies and procedures concerning aspects of human rights HR3 ● 13 Item 2010 2011 2012 6.7, 6.7.4, that are relevant to operations, including percentage of employees trained Practices related to customer satisfaction, including results of surveys measuring customer No. of participants 4,711 5,154 5,327 PR5 6.7.5, 6.7,6, ● 62~65 satisfaction Education hours 5,321 5,887 9,643 6.7.8, 6.7.9 We prohibit discrimination on age, gender, academic background, and 6.7, 6.7.3, HR4 Total number of incidents of discrimination, and actions taken 6.3, 6.3.5 ● 86 PR6 Programs for adherence to laws and standards related to marketing communications ● 62~65 disability when hiring employees. 6.7.6, 6.7.9 6.3, 6.3.3, Total number of incidents of non-compliance with regulations, standards and voluntary codes Operations identified in which the right to exercise freedom of association and collective PR7 ● 62~65 There was no violation of laws, standards, and voluntary codes. HR5 6.3.4, 6.3.5, ● 68 concerning marketing communications bargaining may be at significant risk 6.3.7, 6.4.5 POSCO E&C educates personal information managers in accordance with the personal information protection policy and prevents risks 6.3, 6.3.3, Total number of substantiated complaints regarding breaches of customer privacy and losses of PR8 6.7, 6.7.7 ● 87 from personal information leakage by security check. In 2012, there We prohibit child labor and forced labor. HR6 Operations identified as having significant risk for incidents of child labor, and measures taken 6.3.4, 6.3.5, ● 86 customer data was no complaint related to violation of personal information protec- 6.3.7, 6.3.1 tion or lose of customer data. There was no forced or compulsory labor exceeding legal standards Monetary value of significant fines for noncompliance with laws and regulations concerning HR7 Operations identified as having significant risk for incidents of forced labor, and measures taken ● 86 PR9 6.7, 6.7.6 ● 62~65 There was no violation of the laws. or personal intention. provision of products and services Percentage of security personnel trained in the organization’s policies concerning human rights 6.3, 6.3.5, We provide 31 security service employees with educations on the HR8 ● 86 relevant to operations 6.4.3, 6.6.6 prevention of sexual harassment semiannually (one hour). 6.3, 6.3.6, There was no violation involving rights of indigenous people during GRI G3.1 Application Level HR9 Total number of incidents of violations involving rights of indigenous peoples, and actions taken 6.3.7, 6.3.8, ◐ 86 the reporting period. 6.6.7 Percentage and total number of operations that have been subject to human rights reviews Application Level C C+ B B+ A A+ HR10 ◐ 13 and/or impact assessments Grievances are collected through the Grievance Committee under the Number of grievances related to human rights filed, addressed and resolved through formal HR11 ● 86 labor-management council and internal bulletin board (Moa Square). Report on all criteria listed for Level Same as requirement for Level B grievance mechanisms Report on: There was no grievance related to human rights. G3.1 Profile ‘C’plus: 1.2, 3.9, 3.13, 4.5-4.13, 4.16-4.17 1.1, 2.1-2.10, 3.1-3.8, 3.10-3.12, 4.1-4.4, Society Performance Indicators Disclosures OUTPUT 6.3.9, 6.8, 4.14-4.15 Percentage of operations with implemented local community engagement, impact assessments, SO1 6.8.5, 6.8.7, ◐ 72~75 and development programs 6.6.7 G3.1 Management 6.3.9, 6.8, Item Unit 2010 2011 2012 Management Approach Disclosures Management Approach disclosed for SO2 Percentage and total number of business units analyzed for risks related to corruption 6.8.5, 6.8.7, ● 13 No. of sites that conducted Approach Disclo- Not Required Sites 166 168 191 for each Indicator Category each Indicator Category 6.6.7 corruption risk analysis sures OUTPUT
SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures 6.6, 6.6.3 ● 13 Disclosures Standard Report Externally Assured Report Externally Assured Report Externally Assured G3.1 Performance Report on a minimum of 20 Perfor- Respond on each core G3 and Sector Report on a minimum of 10 Perfor- SO4 Actions taken in response to incidents of corruption ● 13 Indicators & Sec- mance Indicators, at least one from Supplement Indicator with due regard mance Indicators, including at least tor Supplement each of Economic, Environmental, Hu- to the Materiality Principle by either: SO5 Public policy positions and participation in public policy development and lobbying ● 13 one from each of: Economic, Social Performance OUTPUT man rights, Labor, Society, and Product a) reporting on the Indicator or b) and Environment. Total value of financial and in-kind contributions to political parties, politicians, and related 6.6, 6.6.4, Responsibility. explaining the reason for its omission. SO6 ● 86 There was no political donation. Indicators institutions, by country 6.8.3 SO7 Total number of legal actions for anti-competitive behavior and monopoly practices ● 13 Monetary value of significant fines, and total number of non-monetary sanctions for non- 6.6, 6.6.5, The 2012 POCO E&C Sustainability Report was prepared based on the GRI G3.1 guideline, and satisfied the qualitative and quantitative requirements of Level ‘A+’ of the G3.1 guideline. SO8 ● 13 compliance with laws and regulations 6.6.7 And it was also verified through a 3rd party assurance agency ‘DNV.’ 88 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 89
Statement of Third-Party Assurance
INTRODUCTION CONCLUSIONS Det Norske Veritas Certification Ltd. (hereinafter referred to as ‘DNV’) has been commissioned to carry out assurance engagement on POSCO Engineering & In DNV’s opinion, and based on the scope of this Assurance Engagement, nothing has come to our attention to suggest that the Report is not fairly stated. Construction Co., Ltd. (hereinafter referred to as ‘POSCO E&C’) Sustainability Report 2012 (hereinafter referred to as ‘the Report’). This engagement focused on DNV confirms that the Report meets GRI G3.1 Application level ‘A+’. Further conclusions and observations on the adoption of reporting principles are made the information provided in the Report and the underlying management and reporting processes. below. This Assurance Statement is intended for the readers of the POSCO E&C’s Sustainability Report. POSCO E&C is responsible for the collection, analysis, aggrega- Stakeholder Inclusivity tion and presentation of all information within the Report. DNV’s responsibility regarding this Assurance engagement is to the management of POSCO E&C POSCO E&C has engaged with a range of stakeholders regarding sustainability issues. Stakeholder communication channels are stated in detail in the Report. only, in accordance with terms of reference and scope of work agreed. DNV disclaims any liability or responsibility to a third-party for any decisions, whether 6 Stakeholder groups of Society, partners, Investors, Customers, Employees, and Environment groups (SPICEE) are identified. Stakeholder engagement is con- investment or otherwise, based upon this Assurance Statement. ducted independently to identify the expectation of respective stakeholders.
SCOPE OF ASSURANCE Materiality This Assurance Engagement covered data and information in the calendar year 2012. The scope of DNV’s Assurance Engagement, as agreed with POSCO E&C Significant issues are identified by combining business relevance and social impacts. The sustainability issues were sought from various international stan- included the verification of: dards/Peer review/Media research/Stakeholder opinions. The Report generally provides an account of performance on the issues that are most significant to • Sustainability policy, goals, initiatives, practices and performance for calendar year 2012, as described in the Report. POSCO E&C and which are most relevant to its stakeholders. • Data and activities related to the environment, health and safety management, social aspects, and corporate governance issues that refer to the period be- Reliability tween January 2012 and December 2012 as contained in the Report. Data and information presented in the report are generally reliable. However, internal assessment of data management and data checks need to be imple- • Evaluation of the reporting principles for defining the sustainability report content and the quality as expressed in the Sustainability Reporting Guidelines GRI mented. The Report is referred to GRI G3.1 for preparation so that the readers can compare the performance and changes over time. The data and information G3.1. and check of GRI Application Level about the sustainability performance prepared by POSCO E&C were checked by the verification team.
LIMITATIONS Completeness The engagement excluded the sustainability management, performance and reporting practices of POSCO E&C’s suppliers, contractors and any third-parties The scope and boundary of the Report cover all operations, which are material issues and performances related to POSCO E&C and its stakeholders. Most ma- mentioned in the Report. DNV did not interview external stakeholders as part of this Assurance Engagement. Economic performances including financial data terial issues and indicators are reported. More efforts to improve reporting on the performance from overseas project need to be made were cross-checked at head-office with internal documents and the financial statements audited by another 3rd party. The assurance statement on the finan- Neutrality cial statements issued by another 3rd Party is also provided in the Report. Overseas activities are not included in this Assurance Engagement. The information in the Report is generally presented in a balanced manner. The Report clearly distinguishes between factural presentation and the reporting organization’s interpretation of information. STATEMENT OF COMPETENCE AND INDEPENDENCE DNV is a leading provider of sustainability services, including the verification of sustainability reports. Our environmental and social assurance specialists oper- ate in over 100 countries. DNV was not involved in the preparation of any statements or data included in the Report except for this Assurance Statement. DNV OPPORTUNITIES FOR IMPROVEMENT The following is an excerpt from the observations and opportunities reported to POSCO E&C’s management. However, these do not affect our conclusions on maintains complete impartiality toward stakeholders interviewed during the verification process. DNV expressly disclaims any liability or co-responsibility for the Report and are provided to encourage continual improvement. any decision a person or an entity may make based on this Assurance Statement. • Set up the objectives in order to achieve the sustainability vision and strategy and develop the action plan so that the progress of achievement can be at least annually measured and reported. VERIFICATION METHODOLOGY • Adopt more structured and systematic processes for data gathering, analysis and reporting as part of the existing internal audit program to ensure the accu- This Assurance Engagement was planned and carried out in accordance with DNV Protocol. In reaching our conclusion, we have undertaken the following racy and reliability of reported information. work. • Establish documented procedure for accounting and reporting criteria for data gathering so that the consistency can be achieved. • Interviewed POSCO E&C’s management representatives from different divisions and functions • Visited POSCO E&C’s Head office in Incheon and 2 project sites, in Republic of Korea • Examined relevant documents, data and other information requested by DNV and made available by POSCO E&C • Reviewed a selection of internal communication and external media reports relating to POSCO E&C’s sustainability management approach, performance and adherence to its policies • Checked that the Report fulfills the requirement of GRI Application Level. In Kyoon Ahn • Sampling technique for data verification Country Manager The verification conducted in June and July 2013 and provides moderate level according to the DNV Protocol. Seoul, Korea July, 2013 90 POSCO E&C l SUSTAINABILITY REPORT 2012 l Strategies and Management System l Improvement of Sustainability in Projects (centered on E, P, C) l l Harmonization of Profit & Growth l Strengthening Environmental & Safety Management l Improvement of the Shared Social Value l Appendix l 91
Statement of Assurance Report of Greenhouse Gas Emissions UN Global Compact
Introduction POSCO E&C has made public its commitment and resolution to observing 10 principles of social responsibilities by joining UN Glob- DNV Certification, Ltd. (“DNV”) was commissioned by POSCO Engineering & Construction Co., Ltd. (“POSCO E&C”) to verify the POSCO E&C’s Greenhouse Gas al Compact, June 2011. We will make our best effort to reveal whether we abide by principles of Global Compact through our yearly Inventory Report for the calendar year 2012 (“the report”) based upon a limited level of assurance. POSCO E&C is responsible for the preparation of the GHG sustainable report. emissions data on the basis set out within the WRI/WBCSD GHG protocol: 2004 and the principles set out in ISO 14064-1:2006. Our responsibility in perform- ing this work is to the management of POSCO E&C only and in accordance with terms of reference agreed with them. DNV expressly disclaims any liability or responsibility for any decisions, whether investment or otherwise, based upon this assurance statement.
Classification Principle POSCO E&C’s major activities G3.1 Scope of Assurance The emissions data covered by our examination comprise Direct emissions (Scope 1 emissions), Energy indirect emissions (Scope 2 emissions) and Other indi- 1. We support and respect internationally declared · Observance of 10 principles of UN Global Compact HR 1~7 rect emissions (Scope 3): human rights. · Observance of ILO rules • Reporting period under verification: Calendar Year 2012 • Organizational boundary for reporting: Human rights · Application of human rights articles to the contract with suppliers 2. We do not engage in infringement · Implementation of educations on the prevention of sexual HR 1~7 Organizational Boundaries Address / Remark Verification activity of human rights. harassment and ethical management Buildings 4 buildings(including POSCO E&C Tower in Songdo, Pohang office) Desk Review, Site visit, data verification Domestic construction sites 134 sites(in dept. of Plant, Energy, Civil/Environment, Architecture) Desk Review, Site visit, data verification · Observance of Labor Standard Act 3. We acknowledge rights to freedom of association · Operation of labor union HR 5, LA4, LA5 Verification Approach and collective bargaining. · Operation of labor-management council The verification has been conducted by DNV from 8th May through 20th June 2013 and performed in accordance with the verification principles and tasks outlined in ISO 14064-3:2006. We planned and performed our work so as to obtain all the information and explanations deemed necessary to provide us with sufficient evidence to provide a limited verification opinion concerning the completeness of the emission inventory as well as the reported emission figures in 4. We abolish all kinds of forced labors. · Observance of Labor Standard Act and ILO rules HR 7 Labor ton CO2 equivalent. As part of the verification process: • We have reviewed and verified the POSCO E&C’s ‘Greenhouse Gases Information System’ 5. We effectively abolish children’s labor. · Observance of collective agreements HR 6 • We have reviewed the GHG inventory Report • We have reviewed and verified the process to generate, aggregate and report the emissions data 6. We abolish discrimination both on employment · Operating a regular performance management system HR 4, LA 2, LA 10, LA 13, LA 14 Conclusions and at work. · Recruiting more people from regional areas As a result of the work described above, in our opinion nothing has come to our attention that would cause us to believe that the GHG emissions data set out in POSCO E&C’s report are not fairly stated. The GHG Emissions of POSCO E&C for the year 2012 were confirmed as below; · Observance of environmental laws * Qualification: The focused area for verification was on the qualification methodology and system operation, since the GHG system of POSCO E&C was launched in December of 2012. 7. We support preventative approach to | · Placement of managers in charge of on-site environmental management 4.11 environmental issues. · Enhancement of support to prevent environmental accidents Greenhouse Gas Emissions of POSCO E&C Corporation from Yr 2012 (Unit: ton-CO2 equivalent) Organizational Boundary Direct emissions Scope1 Indirect emissions Scope2 Other indirect emissions Scope3 Total emissions · Environment impact assessment POSCO E&C Corporation 7,725 27,281 8,947* (107,364)** 43,953 (142,370) 8. We take the lead in taking bigger · Protection of biodiversity Environment EN 12~14, EN 18, EN 21~22, EN 26, EN 30 environmental responsibilities. · Management of environmental data * Other indirect emissions have been calculated from 1month data in December 2012, when the GHG system was launched to operate. · Establishment of greenhouse gas data system ** The 1year GHG emissions were estimated with 1month data. (The estimated data for 1year = the verified 1month data × 12 months)
※ In order to report the GHG emissions as an integer, the rounded number on the statement might be different from the number on the system with ± 1 tCO2.
· Construction of green building 9. We support environmentally-friendly · Investment in environment-friendly R&D EN 5~7, EN 10~18, EN 26 technology development and its diffusion. · Dissemination of green management to business partner companies Tae-Ho Kim In Kyoon Ahn Lead Verifier Country Manager DNV Certification, Ltd. · Spread of ethical management to business partner companies th 20 June 2013 · Implementation of guidelines in a way of observing Foreign 10. We strive to eradicate all kinds of corruption Anti-corruption Corrupt Practices Act SO 2~4 including unjust enrichment and bribe This Assurance Statement is valid as of the date of the issuance (20th June 2013). Please note that this Assurance statement would be revised if any material discrepancy which may impact on the Green- · Operation of ethics and fair trade consultation center house Gas Emissions of POSCO E&C Corporation. is subsequently brought to our attention. In the event of ambiguity or contradiction in this statement between English version and Korean version, · Practice of customized ethical management Korean shall be given precedent. 92 POSCO E&C l SUSTAINABILITY REPORT 2012
Glossary
Term Definition
AA1000 An international standard or measure of sustainability of a given company
EPC A turnkey base project encompassing engineering, procurement and construction
Global Reporting Initiative, i.e., a research center that develops and distributes international standards and guidelines GRI (Global Reporting Initiative) for sustainability reports of companies around the world
HSE Indicating health, safety, and environment
IFRS (International Financial Reporting Standard) International Financial Reporting Standards
An international standard developed by the International Organization for Standardization regarding systems of ISO 26000 socially responsible management
KPI Key performance indicator
LEED International green building certification system developed by the US Green Building Council (Leadership in Energy and Environmental Design)
Technology to manage 4 factors of project scope, process, quality, and cost in order to fulfill possible requirements in PM (Project Management) all construction processes ranging from project development and after services
United Nations Global Compact, i.e., a UN initiative that encourages companies to participate in sustainable devel- UNGC (UN Global Compact) opment and related efforts to improve ethics and environmental consciousness in international relations
Refers to energy generated by such sources as solar heat, sunlight, biomass, wind, water (hydraulic generation), New and Renewable Energy ground heat (geothermal generation), oceans, waste material, hydrogen, fuel cells, CTL gas, and so forth
The list of the sources of greenhouse gases emitted by an organization, complete with the amount of each gas Greenhouse Gas Inventory emitted
Slag is a partially vitreous by-product of the process of smelting ore, which is divided into blast furnace slag and Slag steel slag. It is used as materials for cement, concrete, and road pavement POSCO E&C Sustainability Report 2012
For more detailed information on our sustainability report, please visit our Environmental Impact Assessment An assessment of the possible positive or negative impacts on environment by a development projects web site, where you can download a PDF version.
A labor union organizing method through which all workers in the same industry are organized into the same Industrial Union Date of publication July 2013 union Publisher Chung, Dong-Hwa Publisher location CSR Group, General Administration Division, POSCO Mock-Up A full-size model of a design or device to identify faults, problems and improvements in the development stage E&C POSCO E&C Tower 1, 36 Songdo-dong, Yeonsu-gu, Incheon, Korea Industrial accident rate calculated by adding ten times of the number of site victims from the violence of Occupa- Converted Industrial Accident Rate E-mail [email protected] tion Safety and Health Acts to the number of other victims (converted accident victims/regular workers*100) Tel +82-32-748-3737 Web site www.poscoenc.com Open Space All grounds unoccupied by buildings *We would like to thank all people who have participated in publishing this report C110010
This report was printed on environment-friendly paper certified by the Forest Stewardship Council (FSC™) with soy ink at the printing house certified by the FSC™.
www.poscoenc.com
Headquarters Songdo office 568-1 Goedong-dong, Nam-gu, Pohang, Gyeongsangbuk-do, Korea POSCO E&C Tower 1 Pohang, P.O. Box 100 36 Songdo-dong, Yeonsu-gu, Incheon, Korea T. +82-54-223-6114~5 T. +82-32-748-2114