Project Details
Project
POSCO E&C Sustainable Financing Framework Second-Party Opinion
Client
POSCO E&C
Project Type
Sustainability Bond/Loan
Industry Group
-
Use of Proceeds
-
Location
South Korea
Evaluation Date
Jun 2020
Evaluation Summary
Sustainalytics is of the opinion that the POSCO E&C Sustainable Financing Framework aligns with the Green Bond Principles 2018, Social Bond Principles 2020, Sustainability Bond Guidelines 2018 and Green Loan Principles 2018. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds – (i) Energy Efficiency, (ii) Green Buildings, (iii) Renewable Energy, (iv) Clean Transportation, (v) Affordable Housing, (vi) Employment Generation, (vii) Socio-Economic Advancement and Empowerment – are aligned with those recognized by the GBP, SBP, and GLP. Sustainalytics considers that the eligible categories will lead to a transition to a low-carbon economy and advance the socio-economic development in South Korea while contributing to the UN Sustainable Development Goals, specifically SDG 7, 8, 9, 10, and 11.
PROJECT EVALUATION/SELECTION
Initial list of potential social and green projects will be identified by a Sustainable Financing Working Group (“SFWG”), which is comprised of members from Treasury, Finance, Risk Management, Sustainability and Technical Departments. The proposed project list will be approved by senior management of POSCO E&C. The SFWG will review eligible projects on an annual basis and manage any updates of the Framework. Sustainalytics considers the project evaluation and selection process in line with market practice.
MANAGEMENT OF PROCEEDS
The processes for management of proceeds is managed by the POSCO E&C’s Finance Team. Proceeds will be allocated using the general funding accounts and tracked via an internal accounting system. Pending full allocation, unallocated proceeds will be temporarily held in cash or cash equivalents, or repay existing borrowings under general credit facilities of the Company. If the existing project is no longer eligible, it will be removed and replaced as soon as practically feasible. This process is in line with market practice.
REPORTING
Until full allocation, POSCO E&C intends to report on allocation and impact of the proceeds on its corporate website on an annual basis. Allocation reporting will include the aggregate amount of allocation to eligible projects, the balance of unallocated proceeds and type of temporary investment, the share of financing and refinancing, and examples of eligible projects. In addition, POSCO E&C intends to report on relevant impact metrics. This process is aligned with market practice