The complaint, filed by Lok Shakti Abhiyan and supporting coalitions in S. Korea, Netherlands, and Norway, concerns POSCOs failure to seek to prevent human rights abuses and carry out comprehensive human rights and environmental studies for its proposed iron mine, steel plant and associated infrastructure in the State of Odisha, India.
The complaint alleges POSCOs efforts to construct a 12 million-ton per annum integrated steel plant, captive power plant, captive port and other related infrastructure in the Jagatsinghpur District will lead to the physical and economic displacement of more than 20,000 people, including individuals who have special legal protections under the Scheduled Tribes or Other Traditional Forest Dwellers (Recognition of Forest Rights) Act. The complainants maintain POSCO has not engaged in meaningful stakeholder consultation with all affected communities to identify the full scope and severity of human rights, social and environmental impacts. The complainants fear that POSCOs failure to conduct due diligence will mean the company will be incapable of preventing or mitigating significant adverse impacts on thousands of people and the environment.
The complaint also addresses the responsibility of the Dutch pension fund ABP and the Norwegian Government Pension Fund Global (along with the pension funds asset managers APG and NBIM) for investing in POSCO. The complaint calls on the pension funds to seek to prevent or mitigate adverse impacts directly linked to their operations through their financial relationships with POSCO.
Relevant OECD Guidelines
- Chapter II
- Chapter II Paragraph A10
- Chapter II Paragraph A11
- Chapter II Paragraph A14
- Chapter IV
- Chapter IV Paragraph 1
- Chapter IV Paragraph 2
- Chapter IV Paragraph 5
The complaint was filed simultaneously at the Korean, Dutch and Norwegian NCPs.
The Dutch NCP, dealing with the case against ABP, accepted the complaint and successfully facilitated several meetings between the parties. In March 2013, a joint final statement was issued in which ABP and APG commit to exercise their leverage bringing POSCOs business practices in line with international standards. The joint statement calls on the three NCPs involved to jointly commission a review and assessment mission to India and to help to facilitate a meaningful stakeholder consultation process.
Following the joint agreement, the Dutch NCP published a statement confirming that the OECD Guidelines apply to minority shareholdings. This sets an important precedent for future cases against financial institutions. The Dutch NCP has offered to assist the Korean NCP in handling its part of the case.
The Norwegian NCP accepted the case and tried to facilitate mediation. However, NBIM refused to engage with the NCP. On 27 May 2013, the Norwegian NCP published its final statement reaffirming the Dutch NCPs assertion that the Guidelines apply to minority shareholders. The NCP further concluded that NBIM was in violation of the OECD Guidelines for refusing to cooperate with the NCP, and for lacking a strategy on how to address human rights risks related to companies in which it invests.
The Korean NCP sent the complaint to POSCO for a response. POSCO denied the allegations, and the NCP requested additional information from the complainants, which they provided. In June 2013 the NCP rejected the complaint as it determined it could not play a role in resolving the dispute, which they consider to be the responsibility of the Indian authorities.
In response to the request of the Dutch parties in their statement, the Dutch NCP explored the possibility of jointly organising a mission to India by the three NCPs involved. However, the Norwegian and South Korean NCPs were unwilling to participate, as they consider the case to be concluded. The parties to the complainant continue to explore other opportunities to set up an independent review and assessment mission to India.
- Company in violation
- Other companies involved
- Affected people
- Other NCP's where the complaint was filed
- Date rejected / concluded
- 13 March 2013