Posco Report 2015

Integrated Report of Economic, Environmental and Social Sustainability POSCO REPORT 2015 ABOUT THIS REPORT Integrated Report The POSCO Report (“Report”) is an integrated report of POSCO’s economic, social and environmental performances in 2015. POSCO has been publishing the Environmen- tal Report since 1995, the Sustainability Report since 2004, and began publishing the POSCO Report that integrates the Annual Report and Sustainability Report since 2012. Also we have integrated the Carbon Report into this report since 2014. Reporting Approach This Report was produced according to POSCO’s own reporting process, referring to the following as guidelines. ·GRI (Global Reporting Initiative) G4 guideline · The International Integrated Reporting Framework set forth by the International Integrated Reporting Council (IIRC) ·ISO 26000 ·Principles of the UN Global Compact Financial Information Reporting Standard The reporting framework and definition of the financial information contained in this Report are based on K-IFRS (Korea-International Financial Reporting Standards). Report Publication Cycle POSCO has published the report annually since 2004. Reporting Period This Report contains information from January 1st, 2015 to Decem ber 31st, 2015. Quan- titative data includes figures from the three re cent years, while some parts of qualitative data include those up to March 2016. The corporate governance section is based on the de cisions made by the Board of Directors at the meeting held on March 11, 2016. Scope of Reporting The Report contains the economic, social, and environmental performances of Pohang Works, Gwangyang Works, Pohang Head Office and Seoul Office. The Section of ‘Perfor- mances in 2015 and plans for 2016’ include economic performances of POSCO’s subsidiaries. The Integrated Sustainability Performance Index accounts for POSCO and its seven affiliates. Some information such as fair trade, quality management, safety and health contains information of all group affiliates which encompass POSCO, domestic and overseas subsidiaries and outsourcing partners. Independent Assurance Samil PwC, an independent assurance institution, conducted assurance on this Report in order to assure stakeholders on the credibility of the data and reporting process. As- surance was conducted in accordance with ISAE3000 and AA1000AS Type II. The assurance information pertaining to this Report is as follows. ·Independent Assurance Report (page 143) ·Assurance Report for POSCO Carbon Report (page 145) Report Distribution and Feedback This Report was published in Korean, English, and Chinese and can be downloaded at POSCO’s website. We receive feedback from the stakeholders through various channels including the internet, phone and mail. Address 6261, Donghaean-ro, Nam-gu, Pohang-si, Gyeongsangbukdo, Korea Phone 054-220-0114, 02-3457-0114 For inquiries on the Report Dept. of Environment, Energy and Social Responsibility 02-3457-0198 Website http://www.posco.com Cover Photo Email IR: [email protected] This photo shows a research fellow conducting PR: [email protected] an axial loading fatigue test of a steel product for Social Contribution: [email protected] an auto parts company. POSCO incorporates CSR: [email protected] technical solutions into products to deliver what customers truly need. Integrated Report of Economic, Environmental and Social Sustainability POSCO REPORT 2015 POSCO REPORT 2015 4 CEO’S MessagE 2016 promises to be another year for POSCO to grow with all our stakeholders to become even more nationally loved and globally respected. We ask for your continued interest and support. CEO’s Message 5 Dear stakeholders, Last year, for the first time in POSCO’s history, we encountered a net loss we achieve the goal of zero harm in 2016. To this end, we will establish on a consolidated basis, caused in part by a confluence of negative external and promote four key strategies: reinforcing self-directed safety spread factors, including a stagnant domestic economy, increased global compe- activities; creating a culture that practices the basics of safety; enhanc- tition and ongoing recession in the global steel industry, as well as poor in- ing the management of enhancing the management of health and pre- ternal performance, including operating loss and foreign exchange losses. vention of disasters; and elevating the level of safety among POSCO and its affiliates and overseas subsidiaries. Despite these challenges, steel segment within POSCO was able to main- tain higher level of profitability compared to other business sectors. In In terms of environmental management practices, POSCO has been diag- fact, we were able to accelerate the process of organizational restruc- nosing and improving various environmental risks, particularly pollution turing, and reinforce ethical management through IP 2.0, an upgrade around the group’s major work sites since 2013. This year, we will once version of IP 1.0. This report aims to highlight POSCO’s achievements again take every possible measure to mitigate latent risks by reducing the in 2015 in order to assert its competitiveness in spite of unprecedented use of chemical materials, developing alternative technologies and strict- market challenges, and to outline corporate plans and goals for 2016. ly managing safety. POSCO has already implemented carbon accounting in response to the Emissions Trading Scheme and, since its implemen- Over the past two years, POSCO was able to raise 3.6 trillion won of tation last year, we have reduced the emission of greenhouse gases by non-debt capital through intensive restructuring and divestment ef- improving energy efficiency. To prepare for the inevitable strengthening forts. So far, our restructuring initiatives have focused primarily on im- of the carbon policy under the Paris Agreement, we will make efforts to proving the financial structure. This year, however, we plan to carry out develop low-carbon core technologies, such as developing energy-effi- thorough restructuring by eliminating any latent financial issues that cient steel materials and recovering medium-low temperature heat. may emerge. Through this plan, the steel sector will serve faithfully as the cash cow to allow continuous growth. In other sectors, differenti- With regard to social responsibility, POSCO is proud to promote various ated competitiveness needs to be achieved in each of the respective social programs through POSCO 1% Sharing Foundation, an organiza- segments to gradually expand importance through comprehensive re- tion created and funded by employee donations from across all POSCO organization of the company’s portfolio. and its affiliates and outsourcing partners. The foundation encourag- es employees to take part in voluntary activities that benefit social Also, we will redouble our marketing efforts to minimize the impact of welfare, such as supporting neglected class groups; protecting and the drop in iron and steel prices and build on the success we have al- preserving traditional culture; and talent donations. Last year, con- ready had in solutions marketing, which allowed an increase in sales struction began for steel-frame daycare facilities to assist low-income of high value-added products. Last year, we introduced the concept of working families in Pohang, Gwangyang, Seoul, and even in Incheon. “human solutions” to win customer loyalty by going beyond techni- Outside Korea, we have built a tailor-made POSCO Steel Village in Viet- cal sales. We will continue to execute leading solutions marketing ini- nam to meet local residents’ needs for economic participation, while tiatives for greater customer satisfaction, underpinned by a cohesive also giving back within a broader social contribution modell. approach to R&D, production and sales. The organic links we forge be- tween our different divisions will help us further expand our sales of Dear stakeholders, World Premium products. Furthermore, we will generate new sources Challenges still remain in the global business environment that may of profit through sales of engineering technology, such as designs and impede the recovery of the steel industry. However, the efforts of operations, as well as steelmaking technology, particularly FINEX. POSCO and its affiliates as a whole over the past two years are starting Another key part of our approach to embedding IP 2.0 is to innovate to show hope for a better tomorrow. Now is the time for another leap our corporate culture in ethics, safety, environment, and social respon- forward. We will further accelerate our efforts to fundamentally re- sibility. POSCO introduced a corporate-wide adoption of a One Strike- vamp the organization and innovate the corporate structure. We hope Out System aimed to foster an ethical culture. In particular, POSCO to achieve this by increasing our operating income, strengthening our adheres to a zero-tolerance policy, regardless of one’s title, position, ethical practices, and identifying greater financial savings. or the degree of gravity for any of the following four major unethical 2016 promises to be another year for POSCO to grow with all our stake- practices: accepting bribes, embezzlement, violation of sexual ethics, holders to become even more nationally loved and globally respected. and fabrication of information. We will strengthen performance-driven We ask for your continued interest and support. compensation for a high performance-oriented virtuous circle, rigor- ously enforced by strict ethical management. Thank you. April

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