Second-Party Opinion Download

Sustainalytics is of the opinion that the POSCO Sustainable Financing Framework is credible and impactful, and aligns with the Sustainability Bond Guidelines 2018 and the Green Loan Principles. This assessment is based on the following:

USE OF PROCEEDS

The eligible categories for the use of proceeds – (i) Electric vehicle battery, (ii) Renewable energy, (iii) Support to Underprivileged, (iv) Support to SMEs Growth and (v) Venture Investment & Incubation – are aligned with those recognized by the Green Bond Principles 2018, Green Loan Principles 2018 and the Social Bond Principles 2018. Sustainalytics considers that the eligible projects will contribute to the growth of low-carbon transportation and development of renewable energy capacity. Similarly, Sustainalytics views that POSCO’s social projects will contribute to the integration of socially vulnerable groups into the South Korean labour market and contribute to employment generation through supporting SMEs with fewer than 20 employees and young ventures and start-ups. Additionally, Sustainalytics views that the eligible projects will advance the UN SDGs 11, 7. 8 and 10.

PROJECT EVALUATION/SELECTION

POSCO’s Project Team will identify potential Eligible Projects based on the Sustainable Financing Framework. The project list will then be evaluated by POSCO’s Sustainable Financing Working Group (“SFWG”) with cross-departmental representation from the Finance, Corporate Sustainability, Operation and Audit departments. The SFWG will also review the allocation to eligible projects annually. This process is aligned with market practice.

MANAGEMENT OF PROCEEDS

Proceeds from the Sustainable Financing Transactions (“SFT”) will be deposited in the company’s general funding accounts and will be tracked through a Sustainable Financing Register. Pending full allocation, the unallocated proceeds will be held in accordance with POSCO’s general liquidity management policy. This process is aligned with market practice.

REPORTING

POSCO commits to publish an annual Sustainable Financing Report comprising an allocation and impact reporting. The allocation reporting will comprise information of the aggregate amount allocated to Eligible Projects, the remaining balance of unallocated proceeds and examples of Eligible Projects. With regards to the impact reporting, POSCO commits to disclose KPIs such as sales volumes of eligible projects to electric vehicles battery producers, renewable energy generation (in MWh), GHG emissions avoided/reduced (in tonnes of CO₂e), number of jobs created, and number and type of disadvantaged community helped. Sustainalytics views the scope and granularity of POSCO’s reporting to be aligned with market practice.