On 12 December 2019, KTNC Watch, PUSAKA, SKP-KAMe, and WALHI Papua filed a specific instance against Posco International and two of its financiers, the the Export-Import Bank of Korean (KEXIM) and the National Pension Service (NPS) at the Korean NCP. The complaint argues that POSCO International‘s subsidiary in the palm industry in Papua, Indonesia, has been engaged in business activities causing a range of adverse health, labour rights, and environmental impacts. The complaint alleges that POSCO as well as its financiers (lenders) failed to implement adequate human rights due diligence to identify and address the adverse impacts caused by the subsidiary.
The complainants seek the Korean NCP’s good offices to encourage the three companies to adopt policies for reviewing environmental and social risks in developing natural resources overseas, and more specifically to refrain from providing further loans to support the operations of POSCO International‘s subsidiary in Papua.
Relevant OECD Guidelines
- Chapter II
- Chapter II Paragraph A10
- Chapter II Paragraph A12
- Chapter IV
- Chapter IV Paragraph 2
- Chapter IV Paragraph 3
- Chapter IV Paragraph 5
On 17 March 2020, the Korean NCP issued an initial assessment accepting the complaint for good offices. The NCP accepted the complaint regarding POSCO and the National Pension Service. The NCP also accepted the complaint against KEXIM. The NCP clarified that in this matter, KEXIM could be considered a multinational enterprise covered by the OECD Guidelines because 1) it has oversea branches in the United Kingdom, Indonesia, and Vietnam; 2) in this case, its funding of POSCO was not related to any official development assistance projects; and 3) the financial services it provided to POSCO, providing loans and taking interest, were commercial in nature like those of a typical financial institution. The NCP also found the complaint satisfied the other Guidelines’ admissibility criteria.
On 13 January 2022, the Korean NCP published its final statement in relation to the complaints against Posco International and NPS. The NCP facilitated three mediation meetings between the parties, but they were unable to reach a full agreement on the issues raised in the complaints. However, the NCP opined that as a result of the mediation “both parties recognized the need to listen to the opinions of local people and establish a system for in-depth dialogue with local residents.” The NCP considered that Posco International had complied with the Guidelines in several respects and that NPS had taken steps to improved its ESG measures.
The NCP made recommendations to both Posco International and NPS, including:
- For both Posco International and NPS to establish communication channels to deal with the issues raised by the complainants and continue their engagement;
- For Posco International to explain to the complainant the company’s efforts to resolve the issues, including through consultations with local residents about the complaint, compensation, and improvement measures;
- For Posco International to implement the ‘No Deforestation, No Peat, No Exploitation” (NDPE) policy and the Roundtable on Sustainable Palm Oil (RSPO) criteria, and for both Posco International and NPS to ensure that Guidelines, the OECD Due Diligence Guidance for Responsible Business Conduct, and the Guidance for Responsible Agricultural Supply Chains are considered during the company’s due diligence process; and
- For both companies to submit a performance report six months after the receipt of the final statement.
- Company in violation
- Other companies involved
- Affected people
- Date rejected / concluded
- 13 January 2022
- KTNC Watch et al vs. POSCO International, National Pension Service and KEXIM
- KTNC Watch et al vs. KEXIM, POSCO International and National Pension Service