Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Management
• Social Contribution
• Shared Growth
• Great Work Place
• Customer Satisfaction
• Stable Electricity Supply
• Global Market Expansion
• Fuel Cell Business
• Ethical Management
• Corporate Governance

Environmental Achievements

• Reduced greenhouse gas emissions per MWh by 19% compared to 2009 levels
• Reduced nitrogen oxide emissions per MWh by 84% compared to 2009 levels
• Reduced energy consumption by 15,878 MWh annually through various energy reduction activities
• Crude oil substitution effect of KRW 57 billion per year from Gwangyang Off-Gas Combined Cycle Power Plant
• Reduced GHG emissions by 0.18 million tons from Gwangyang Off-Gas Combined Cycle Power Plant
• Decreased the amount of waste in plants by 72% compared to 2009 levels

Social Achievements

• Launched a project to improve the energy efficiency of aged housing
• Opened an in-house nursery
• Adopted a flexible work system
• Certified as a family-friendly company
• Achieved zero industrial accidents in 2012
• Average employee volunteer hours increased to 34.2 hours per person
• Benefit sharing value increased to KRW 556 million

Governance Achievements

• Introduced a fair trade compliance program
• Established an ethical management system
• Implemented a risk management system
• Improved financial soundness with debt to equity ratio decreasing from 242% to 173% year on year
• Accredited to UN Global Compact

Climate Goals & Targets

Environmental Challenges

• High debt ratio (173% in 2012)
• Lack of power generation facilities to ensure stable electricity supply
• Tightening regulations on GHG emissions globally
• Potential climate change risks and reputation risks
• High stakeholder risk

Mitigation Strategies

• Capital increase of KRW 200 billion
• Repayment of principal and interest
• Active investment in facility construction and maintenance
• Securing financial resources for stable electricity supply
• Promoting energy efficiency and new and renewable energy business
• Building smooth relationships with stakeholders
• Emphasis on sustainability management

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier selection and evaluation standards
• Fair electronic bidding processes
• Subcontracting Evaluation Committee

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Tightening regulations on GHG emissions

Opportunities

• Development of energy-efficient products
• Expansion of new and renewable energy business

Reporting Standards

Frameworks Used: GRI G3.1 Guideline, EUSS (Energy Utility Sector Supplement), ISO 26000, AA1000SES (Stakeholder Engagement Standard)

Certifications: ISO 14001

Third-party Assurance: Ernst & Young

Sustainable Products & Innovation

• Fuel cell
• Reaction-type steam turbine

Awards & Recognition

• Citation for contributing to environment preservation and water management (Incheon Metropolitan City)
• Korea Environmental Award
• Best company in fire safety (Incheon Metropolitan City)
• POSCO Family Environmental Management Award
• Sustainability Management Award
• Family-friendly Company Certificate

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced greenhouse gas emissions by 258,000 tCO2/year (Busan & Pohang Waste Treatment & Power Generation Facility)
• Reduced CO2 emissions by 44,000 tCO2/year (Tancheon Water Reuse Center Using Sewage Heat)
• Lowered annual crude oil import costs by KRW57 billion and reduced greenhouse gas emissions by around 180,000 tons per year (Gwangyang Off-gas Combined Cycle Power Plant)

Social Achievements

• Various community service programs including educational support, volunteer activities, and financial assistance to needy children
• Shared growth initiatives with suppliers, including joint R&D projects and fair trade practices
• Established a program for self-regulated ethical practice and provided training to help employees avoid ethical problems

Governance Achievements

• Established a Code of Ethics and a program for self-regulated ethical practice
• Implemented a system for monitoring employee conduct to instill an ethical mindset
• Implemented fair and transparent processes for selecting and contracting with subcontractors

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Fair and transparent selection of subcontractors
• Joint R&D projects with best-performing suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Development of renewable energy sources

Reporting Standards

Frameworks Used: Null

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Fuel cells
• Renewable energy technologies

Awards & Recognition

• Outstanding Workplace for BLUE SKY Air Quality Improvement Performance by the Incheon Municipal Government in 2012

Environmental Metrics

ESG Focus Areas

• Economic Performance
• Governance
• Ethics and Integrity
• Renewable Energy
• Regulatory Compliance
• Financial Health
• Operational Efficiency
• Employee Well-being
• Employee Development
• Climate Change

Environmental Achievements

• Reduced greenhouse gas emissions to 11,322,524 tCO2 in 2017.
• Achieved 20.4% water recycling rate in 2017.
• Applied world's best environmental protection facilities in Samcheok power plant.
• Successfully operated 62.7MW onshore wind power plant in Jeonnam.
• Obtained a license for 300MW offshore wind power plant construction.

Social Achievements

• Launched various employee communication activities.
• Certified as a family-friendly company.
• Implemented various programs for employee well-being and work-life balance.
• Achieved P-GWP index of 73 in 2017.
• Conducted various social contribution activities, including Energy Dream project.

Governance Achievements

• Strengthened the board of directors' oversight by appointing an additional non-executive director.
• Implemented a Clean POSCO system to prevent corruption.
• Actively promoted ethical management through various education and activities.

Climate Goals & Targets

Environmental Challenges

• Weakening of LNG power plant competitiveness due to the entry of large-scale base power plants.
• Decreased power sales prices due to increased power reserve rate.
• Uncertainty in the power market due to government policies and regulations.
• Climate change and environmental regulations.

Mitigation Strategies

• Implemented LNG direct import contracts to improve profitability.
• Developed smart power plant technology to improve efficiency and reduce costs.
• Diversified business portfolio by expanding renewable energy business.
• Strengthened financial health through equity financing and debt reduction.
• Actively responded to climate change through greenhouse gas emission management and renewable energy expansion.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Fair and transparent procurement practices.
• 100% cash payment for purchases.
• Support for small and medium-sized enterprises.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Changes in power industry policies and regulations.

Opportunities

• Expansion of renewable energy business.

Reporting Standards

Frameworks Used: GRI G4, EUSD, ISO 26000, UN Global Compact

Certifications: ISO 14001:2015, OHSAS 18001, KOSHA 18001

Third-party Assurance: Samil Accounting Firm

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Fuel cells
• Renewable energy technologies

Awards & Recognition

• Family-friendly company certification (2012, 2015, 2017)
• 2016 Asian Power Award for Vietnam Mong Duong II power plant

Environmental Metrics

ESG Focus Areas

• Economy
• Society
• Environment
• Governance

Environmental Achievements

• Reduced GHG emissions to 11,322,524 tCO2 in 2017
• Achieved zero outage for three years at Gwangyang Power Plant (as of October 2018)
• Implemented the Emissions Trading Scheme
• 100% compliance with environmental regulations
• Improved air quality around business sites using CleanSYS
• Increased water reuse to 21.6% in 2017
• Minimized waste discharge by conserving resources and increasing recycling

Social Achievements

• Acquired “Best Family-Friendly Management Certificate”
• Implemented flexible working hours scheme
• Operated parental leave policy
• Implemented the Self-directed Safety Spread (SSS) activity
• Achieved multiple instances of zero accidents at various power plants
• Implemented the Benefit Sharing System with SMEs
• Donated KRW 100 million annually to the “Industry Innovation Campaign 3.0” fund
• Maintained good labor-management relationship through collective bargaining and grievance resolution

Governance Achievements

• Strengthened the Board of Directors (BOD) with an additional non-executive auditor
• Maintained 100% and 94% attendance rates at BOD meetings in 2016 and 2017 respectively
• Operated the Clean POSCO System to create a transparent culture and protect good employees
• Implemented the Fair Trade Compliance Program
• Complied with POSCO’s code of ethics and the “One Strike Out” system

Climate Goals & Targets

Environmental Challenges

• Net income deficit in 2016 due to difficult business environment (changes in energy policies, emergence of new power generators, slowdown in electricity demand, decline in oil prices)
• Weakened position of LNG generators in the electricity market due to low price competitiveness
• Uncertainty in the market due to high dependence on government policy for new and renewable energy
• Changes in policies and regulations of the electricity industry caused by climate change
• Concerns about electricity supply and demand due to impacts of record-breaking heat and energy transition policy

Mitigation Strategies

• Cost reduction and plant smartization in Power Generation sector
• Constant improvement of quality and operation technology in Fuel Cell Business
• Business developments in coal-fired power generation, new and renewable energy, and overseas IPP projects
• Direct LNG import for Incheon Combined Cycle Power Plant to reduce prime costs
• Expansion of LNG business to other power plants
• Activating demand response (DR) market to maintain reserve margin

Supply Chain Management

Supplier Audits: 36 suppliers audited in 2016-2017

Responsible Procurement

• Fair Trade and Win-Win Growth Agreement with suppliers
• Fair Trade Compliance Program
• Transparent transaction procedures
• 100% cash payment on purchase
• Improved bidding system

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Limitations in securing business opportunities due to domestic/overseas regulations of climate change response

Opportunities

• Expansion of new and renewable energy business
• Development of fuel cells

Reporting Standards

Frameworks Used: GRI G4, Electric Utilities Sector Disclosures (EUSD), ISO 26000, UN Global Compact

Certifications: ISO 14001:2015, KOSHA 18001 (domestic worksites), OHSAS 18001 (Indonesia worksite), ISMS (Information Security Management System)

Third-party Assurance: Samil PricewaterhouseCoopers (PwC)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Fuel cells
• Smartization of power plants

Awards & Recognition

• Minister of Environment’s Award (Busan SRF Power Plant)
• Power Utilities of the Year-Vietnam (Vietnam Mong Duong II Power Plant)

Environmental Metrics

ESG Focus Areas

• Financial Health Enhancement
• Air Pollutant Management
• Economic Value Creation
• Ethical Management
• Response to Changes in Energy Policy
• Renewable Energy Business Promotion
• Securing Competitiveness in Power Generation Costs and Facility Efficiency
• Social Contribution Activities for Solving Social Problems
• Power Plant and Employee Safety Management
• Creating a Good Working Environment

Environmental Achievements

• Reduced CO2 emissions (Specific figures not clearly stated in the provided text, but reduction is mentioned in relation to renewable energy initiatives and energy efficiency improvements.)
• Achieved 'Zero' safety accidents in 2018.
• Implemented various environmental management systems and obtained ISO 14001 certification.

Social Achievements

• Launched 'Energy Dream' project to improve energy efficiency and living conditions for energy-poor households.
• Supported local communities through various activities, including volunteer work and community investment.
• Maintained a good working environment with various employee welfare programs.

Governance Achievements

• Established an ethical management system and implemented anti-corruption training.
• Improved transparency and independence of the board of directors.
• Strengthened internal control systems.

Climate Goals & Targets

Environmental Challenges

• Changes in energy paradigm (decarbonization, aging coal power plants, renewable energy expansion)
• Risks associated with LNG direct import (supply shortages, surplus)
• Maintaining financial health amidst large-scale investments and market fluctuations

Mitigation Strategies

• Developed strategies for LNG direct import, including risk analysis and securing alternative sourcing strategies.
• Implemented a comprehensive risk management system.
• Focused on cost reduction and efficiency improvements in power generation.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Fair and transparent procurement practices, including e-Procurement system, and consideration of environmental and social responsibility in supplier selection.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather, natural disasters

Transition Risks

• Changes in energy policy, market shifts

Opportunities

• Development of energy-efficient products and services, expansion of renewable energy business.

Reporting Standards

Frameworks Used: GRI Standards, EUSD (Electric Utilities Sector Disclosures), ISO 26000, UN Global Compact

Certifications: ISO 14001, KOSHA 18001

Third-party Assurance: Samjong KPMG

UN Sustainable Development Goals

• SDG 7 (Affordable and Clean Energy)
• SDG 9 (Industry, Innovation, and Infrastructure)
• SDG 11 (Sustainable Cities and Communities)

'Energy Dream' project contributes to SDG 7, LNG infrastructure development contributes to SDG 9, and community development initiatives contribute to SDG 11.

Sustainable Products & Innovation

• Renewable energy technologies (solar, wind), fuel cells, SRF power generation.

Awards & Recognition

• Environment Minister's Award for Busan SRF power plant.

Environmental Metrics

ESG Focus Areas

• Climate Change
• Sustainable Supply Chain
• Building Trust with Local Communities
• Workplace Safety
• Governance
• Ethical Management
• Human Rights
• Diversity & Inclusion

Environmental Achievements

• Selected as an excellent company in total volume control of air pollutants in 2021
• Reduced NOx emissions generated when starting up generators by 80% in 2019 and 15% in 2020
• Reduced annual GHG emissions by 6,233 tCO2 through improved waste heat recovery
• Reduced annual GHG emissions by 6,035 tCO2 through upgrading gas turbine filters
• Reduced annual GHG emissions by 1,277,819 tCO2 through operation of highly efficient Units #7 to #9
• Reduced annual GHG emissions by 83 tCO2 through highly efficient building lighting

Social Achievements

• Certified as an excellent family-friendly company for four consecutive years
• Implemented various family-friendly policies
• Achieved 87 points in employee satisfaction (6.1% year-on-year increase)
• Maintained a low voluntary turnover rate of 3.5%
• Carried out social contribution activities totaling KRW 1,703 million
• Completed 7,596 volunteer hours (13.91 hours per person)

Governance Achievements

• Established the Corporate Citizenship Office in 2020
• Implemented the Fair Trade Compliance Program since 2009
• Operated the Ethics Reporting Center
• Implemented a “One Strike Out” system for unethical behaviors
• Maintained a high attendance rate of 100% at BOD meetings

Climate Goals & Targets

Environmental Challenges

• Climate change
• Energy transition
• Supply chain disruptions
• COVID-19 pandemic
• Maintaining air quality
• Ensuring workplace safety
• ESG reporting requirements

Mitigation Strategies

• Developed the “2050 Blue and Green” vision for carbon neutrality
• Implemented strategies for hydrogen dual-fuel power generation and renewable energy expansion
• Established a systematic risk management system based on TCFD recommendations
• Implemented preemptive measures to prevent and stop the spread of COVID-19
• Improved environmental facilities and implemented voluntary monitoring and reduction activities
• Strengthened safety management systems and conducted regular safety training
• Complied with GRI Standards, SASB, and TCFD recommendations for ESG reporting

Supply Chain Management

Responsible Procurement

• e-Procurement system
• SRM system
• Fair bidding system
• Financial support programs for partners
• Preference program for companies engaged in corporate citizenship

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Changes in energy policies and regulations

Opportunities

• Expansion of renewable energy and hydrogen businesses

Reporting Standards

Frameworks Used: GRI Standards, ISO 26000, TCFD, SASB

Certifications: ISO 14001

Third-party Assurance: Korea Management Registrar (KMR)

UN Sustainable Development Goals

• SDG 3
• SDG 4
• SDG 7
• SDG 8
• SDG 10
• SDG 13
• SDG 14
• SDG 15
• SDG 16
• SDG 9

POSCO ENERGY's initiatives contribute to these goals through various ESG activities

Sustainable Products & Innovation

• Hydrogen dual-fuel power generation
• Renewable energy projects
• Fuel cell technology

Awards & Recognition

• Excellent company in total volume control of air pollutants (2021)
• Grade A in the Safety and Health Mutual Cooperation Program (2021)