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