Let’s take a closer look at the main programs among various shared growth activities and sustainable purchasing activities through the spread of ESG activities in the supply chain one by one.
I Open sourcing
The first shared growth program to be introduced is ‘Open sourcing’. Let’s suppose that there is a small and medium-sized enterprise that has just started. In the past, even if they tried to do business with POSCO, they could not easily access it without knowing anyone inside the company. POSCO has been struggling to solve this problem and finally created an e-Catalog.
e-Catalog, an online marketplace that encourages fair competition among small and medium-sized enterprises, is a platform where any company can freely register and promote its products. It was created with the purpose of establishing a transparent purchasing environment while optimizing product specifications by providing fair supply opportunities to material suppliers by preparing a platform to introduce their products, and also by discovering and introducing excellent new products and alternatives to the material use department.
The e-Catalog system was developed to allow material suppliers to promote their products without visiting POSCO Use Department in person, and to make it easier to source alternative goods at the Purchase Department.
l Fair and Timely Payment
In 2018, POSCO abolished the lowest bidder system for the first time among private enterprises and replaced it with those focused on fair trade, including the lower price limit bidding system and the TCO bidding system.
Also in 2019, POSCO first introduced the ‘subcontract win-win payment system’ to prevent unpaid or delayed payments between primary and secondary partner companies, which resulted in a total of 107.6 billion won in payments by the end of last year through this system.
Besides, it also operates a ‘preferential purchase system for socially friendly enterprises’ to expand bidding transactions and give incentives to the companies with disabilities, social enterprises, etc.
l Benefit Sharing
Benefit Sharing (BS), which has been implemented by POSCO for the first in Korea since 2004, is a program that jointly conducts improvement activities and shares the benefits with business partners. It is a representative activity that is faithful to the corporate citizenship management philosophy in terms of introducing the concept of creating symbiotic value beyond the simple cost reduction level.
Since the implementation of the system in 2004, 5,163 cumulative tasks have been carried out by the first half of 2021, and performance compensation worth 632.4 billion won was achieved.
Benefit Sharing is expected to play an important role in strengthening the capabilities of not only POSCO but also the entire industrial ecosystem. POSCO will expand BS to safety, environment, logistics, marketing, and new business areas, and will do its best to establish itself as a longevity program for shared growth by sharing the achievements to enhance the practical satisfaction and capabilities of participating companies.
l POSCO Productivity Innovation
POSCO Productivity Innovation Program is a program that delivers smart factory technologies successfully built by POSCO and QSS(Quick Six Sigma) which is POSCO’s unique manufacturing innovation technology, to small and medium-sized enterprises.
‘People’-oriented productivity innovation, which changes the company’s constitution by first improving the way of working and supports the long-lasting effects of innovation by building smart factories based on change, is the key point of the POSCO Productivity Innovation program. Through these programs, POSCO will continue to expand in the direction of not only improving its manufacturing process but also resolving the issues related to energy, environment, and safety.
POSCO is also supporting energy-saving consulting for desired companies in connection with smartification competency strengthening consulting. It is an activity that identifies the current status of energy use through heat and electricity diagnosis, discovers loss factors, and suggests ways to improve energy savings. Last year, 35 companies have participated, saving an average of 17 million won. This has the same effect as saving 1,590 tons of CO2 when converted into carbon emissions.
l Shared Growth Support Group
Shared Growth Support Group is an employee-participatory shared growth activity that utilizes the capabilities, infrastructure, and know-how held by employees of each department of POSCO to support the growth of their partner companies.
It is a concept of encompassing the support activities that were previously classified as Innovation Growth Support Group, including the shared growth support group of Plant, Equipment and Materials Procurement Office that supports consulting in the ESG field, Facility solutions from the Facility Technology department to inspect and improve facilities of Small and medium-sized enterprises, Techno-partnership of the Technology Research Institute by supporting research manpower and experimental equipment, and also includes safety, energy, QSS innovation and more.
The Shared Growth Support Group supports small and medium-sized enterprises to identify problems from the ground up and to derive practical solutions based on them.
There are four key directions for support: △Establishing a Smart Factory △ Resolving ESG Issues △Enhancing energy and equipment efficiency △ Introducing New Technologies. A total of 14 companies will be eligible for the support this year, and consulting will be conducted on seven companies in the second half of the year.
l POSCO Youth Dream Job Matching
POSCO uses its excellent education and training infrastructure to provide education and training to young job seekers who want to work at partner companies and other small and medium-sized enterprises, and also to link them with job placement. A total of 126 young talents were employed by POSCO trading partner companies last year through the program which has the effect of securing excellent human resources while solving job problems in the local community.
l Corporate Citizenship Friends
Corporate Citizenship Friends is a social contribution program launched in 2019 by employees of POSCO and POSCO’s partner companies to solve various social problems and take the lead in creating a warm community.
Last year, 4,000 hand sanitizers were delivered to public facilities, traditional markets, daycare centers, and welfare facilities in Pohang and Gwangyang to prevent the spread of COVID-19 in the local community. Through the good advance payment campaign, it has received great acclaim by revitalizing local businesses that have been depressed because of COVID-19. This year, considering social issues, POSCO plans to select ‘carbon neutrality’ and ‘resolving local community issues’ as the main themes and carry out activities.
l POSCO ESG Purchase System
POSCO has newly established the POSCO ESG Purchase System to actively implement ESG management from the purchasing stage in line with the growing social demand for ESG management.
POSCO has established a vision of ‘becoming a leading global sustainable purchasing company’ and three action plans to achieve it.
For suppliers who wish to make new transactions, POSCO will give them entry qualifications after examining the basic ESG-related qualifications such as compliance with environmental and human rights regulations, and ethical management. For the existing suppliers, POSCO will strengthen the evaluation level of environmental certification or ESG-related activities to induce improvement and to limit supply if the evaluation is not satisfactory.
It plans to double the number of eco-friendly purchases to $2 billion by 2025 with the use of goods from a 3R perspective which is expanding recycling of waste resources(Recycle), reducing greenhouse gases and air pollution by purchasing energy-efficient and eco-friendly certificates(Reduce), and minimizing waste of resources by the reuse of materials(Reuse).
It operates a curriculum on ESG understanding and purchasing policy for small and medium-sized enterprises’ suppliers who still have a low understanding of ESG. It also added ESG compliance requirements to the ‘Supplier Code of Conduct’, which stipulates basic matters that suppliers should follow. In addition, the company is operating a ‘Shared Growth Support Group’ and an ‘Eco-friendly Consulting Support Group’ to provide support for suppliers to improve ESG-related issues, and will strengthen management to ensure suppliers comply with the *responsible mineral policy.
In addition, we plan to actively take the lead in implementing the management philosophy through POSCO’s ESG purchasing system in the future, such as holding the ‘Group company ESG purchasing council’ so that the group companies can practice ESG purchasing at the same level as POSCO.
INNOVILT, a combination of innovation, value, and built of building, is an integrated construction steel brand launched in November 2019 to promote steel premiumization in the earnest.
Among the steel building material customers’ products in which POSCO steel is 100% used, they are finally certified as INNOVILT products by comprehensively judging technology skills and marketability, and the company that manufactures INNOVILT certified products is called the INNOVILT Alliance. In other words, INNOVILT is a win-win platform that POSCO, along with steel construction companies, creates new values for the construction industry and grows together.
l GEM Matching Fund
It is the first global matching fund established between the mining and steel industries and GEM means ‘Go Extra Mile’, which embodies POSCO’s Corporate Citizenship philosophy, and also has the dictionary meaning of ‘jewel’.
The two companies contribute $100,000 annually in a 1:1 matching method to discover beneficiaries within the supplier’s nation and Korea, creating meaningful social values within the mining-steel industry value chain for two years at the intersection of the two countries. It is differentiated from simple donations, providing selective support for mine-linked scholarships, forest restoration projects in areas damaged by forest fires, and the use of education in cooperative companies and local communities where mines are located.
POSCO has expanded its support for both community environment and education projects by creating GEM matching funds with a total of seven raw material suppliers in Australia, the United States, and Brazil since it established its first fund (Opal) with Australian coal supplier Yancoal in 2019.
Representatively, POSCO is boosting symbiotic social values by contributing to carbon emission and fine dust reduction through forest restoration activities in areas damaged by forest fires in Gangwon-do and also by creating the classroom forests in elementary schools in downtown Seoul, while supporting Australian job training and mine employment. It plans to continue to create social and environmental values from the ESG perspective by expanding the GEM matching fund programs with global raw material suppliers.
So far, we have looked at the Together With POSCO brand and shared growth program. Lastly, let’s solve the remaining questions by listening to the stories of those in charge of taking the lead in promoting the brand and enhancing the shared growth program.
POSCO’s dream of creating social value with partner companies and co-prosperity with local communities will come true with the Five POSCO corporate citizenship Brands. Please look forward to the next episode of Challenge With POSCO brand.