POSCO : ESG Report

POSCO

ESG Policies & Positions

Green Tomorrow,

POSCO MUSEUM

Contents

1. Overview
2. Environmental (E)

1. Net-zeroCommitment
2. Environmental Management Guidelines
3. Our Position on Biodiversity
4. Our Position on No Deforestation
5. Social (S)

1. Safety and Health Policy
2. Human Rights Guideline

129 Our Position on Human Resource (HR) and Labor

131 Human Capital Development System

1. Our Position on Diversity, Equity, and Inclusion (DE&I)
2. Information Security Policy
3. POSCO Supplier Code of Conduct

138 Policy on Responsible Minerals

140 Governance (G)

1. Corporate Governance Charter

1. Code of Ethics

1. Our Position on Stakeholder Engagement Framework
2. Anti-corruptionCompliance Guidelines

1. Tax Policy

Overview

Based on its management philosophy of 'corporate citizenship,' POSCO is continuously changing and innovating together with all its stakeholders. POSCO, in addition to creating economic gains, is a leader in addressing social issues and strives to build a role model for sustainable growth. To enable our employees to internalize the management philosophy of corporate citizenship and to establish it as our organizational culture, POSCO created the Charter of Corporate Citizenship that sets out our goals as a sustainable company and our principles of practicing each area of B-S-P(Business-Society-People), and created the Corporate Citizenship Practice Guide that sets out the values and guidelines pursued by each major business unit. POSCO is also advancing its sustainable management system by amending and supplementing the company rules and guidelines that reflect the ESG-related global initiatives.

POSCO ESG Policies & Positions, which is to be released this year, provides POSCO's major ESG policies and positions as a corporate citizen. The environment section (E) sets out our net-zero commitment and the environmental management guidelines, and the social section (S) sets out the safety and health policy, human rights guidelines, and the supplier code of conduct. Lastly, the governance section (G) includes the Code of Ethics, the Anti-corruption Compliance Guidelines, and the Tax Policy. By fully disclosing its policies and positions for each area of ESG, POSCO seeks to communicate its commitment to ESG management and its principles. All POSCO employees promise to observe and comply with its ESG policies and positions and going forward, plan to continue to make improvements in line with the stakeholders' demands.

The ESG Policies & Positions in this report apply equally to all of POSCO's major business sites. As a corporate citizen, POSCO communicates with all stakeholders with whom it conducts business so that they will respect and comply with its ESG policies and positions.

• POSCO respects and supports the globally accepted international human rights standards including the Universal Declaration of Human Rights (UDHR), the UN Guiding Principles on Business and Human Rights, the UN Global Compact Ten Principles, and the OECD Guidelines for Multinational Enterprises.
• To support the efforts of the global community that is inclined to achieve sustainable development based on the UN SDGs, POSCO will continue to improve its policies and positions, communicate and work harmoniously with all of its stakeholders including customers, employees, and shareholders.
• This report was prepared based on the POSCO Corporate Citizenship Report and the POSCO ESG Policies & Positions. POSCO owns the copyright, and this report may not be duplicated, in part or in whole, or provided to a third party without its prior consent.

Environment (E)

Net-zero Commitment

POSCO's Net-zero Commitment by 2050

The UN IPCC(Intergovernmental Panel on Climate Change) Special Report, published in October 2018, The UN Intergovernmental Panel on Climate Change (IPCC) Special Report, published in October 2018, highlights the importance of limiting the expected global average temperature increase within 1.5℃ above the pre-industrial levels by 2100, in order to control numerous threats posed by climate change. The governments of each country, including Korea, have since pledged to achieve carbon neutrality by 2050. Following the 2050 carbon neutrality pledge, major investment groups and their clients have pledged to achieve carbon neutrality and are demanding investment firms and suppliers to participate in this move. POSCO also recognized the urgent need to respond to climate change and established the POSCO Net-zero Commitment 2050 vision in December 2020 with the Board's approval, and published the Climate Action Report in accordance with the guidelines of Task Force on Climate-Related Financial Disclosures (TCFD). Through these efforts, POSCO is trying to fulfill the role of good corporate citizen while increasing its competitiveness by transitioning into a low-carbon production line and restructuring its business model. With the goal of achieving the net-zero target by 2050 based on its hydrogen-based steelmaking, POSCO has set a path towards 20% carbon emission reduction by 2030 (10% via worksite reduction, 10% via avoided emissions) and 50% by 2040. To specify the vision of our net-zero commitment and to enhance our ability to execute it, we created the Fundamental Roadmap to Net-zero Commitment 2050 that includes mid to long-term comprehensive strategies covering raw materials, investments, energy, and technology development.

The short- to mid-term plan to reach the net-zero target is to introduce electric furnaces before

commercializing hydrogen-based steelmaking technology; to take advantage of current operation facilities to use low carbon materials; and to develop a bridge technology such as low HMR operation1) and CCUS2) technology, in order to reduce coal and energy consumption during processing. In the mid- to long-term, we plan to achieve the net-zero target through the phased introduction of renewable-energy-based HyREX3) and electric furnaces in step with the development speed of hydrogen-based steelmaking technology.

1. Low HMR operation: Operation technology that increases the ratio of scraps instead of hot metal (HMR) to reduce carbon emission.
2. CCUS technology: CO2 Capture, Utilization & Storage, CO2 capture & storage technology.
3. HyREX (Hydrogen Reduction): Hydrogen-based steelmaking technology based on POSCO's FINEX fluidized-bed furnace technology that produces molten iron using powdered iron ore and hydrogen.

CO2 Reduction Goals

(Unit: 10,000 tons CO2)

• 10% reduction at worksites
  10% reduction via avoided emissions

7,882 (Performance)	▼ 20%	▼ 50%
			Net Zero
Base Years ('17~'19)	2030	2040	2050

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Environmental Management Guidelines

POSCO is responding proactively to environmental issues such as climate change, particulates, waste, and chemicals. In addition, based on our corporate citizenship management philosophy, we have established environmental guidelines that are rooted in our corporate rules and regulations, and environmental management policies.

To minimize our negative impact on the environment during business and production processes, we are actively promoting environmental management and expanding it to our supply chains and partner companies. In January 2010, we published our first Environmental Manual, followed by POSCO Group Integrated Environmental and Energy Policy, an amended version in June 2019, and have since been in compliance therewith. Moreover, we have been certified by internationally recognized environmental standards including ISO 14001 and 50001 and are regularly renewing our certifications.

POSCO complies with the environmental laws and regulations applicable to the Korean and overseas worksites and strives to continuously improve its environmental performance by systematically monitoring environmental impacts and preventing pollution. In addition, we are minimizing the negative impact on the environment during our business and production process and expanding the scope to our supply chains and partner companies.

Worksite Environment Management

On its worksites, POSCO is managing its environmental goals by linking them with the key performance indicators (KPIs) of its environmental departments and officers. We have established the environmental standards for each area of environmental management, such as air, waste, and water quality, and have implemented measures such as education and training, establishment and management of guidelines, and internal auditing. In addition, we are applying eco-friendly production processes and optimal prevention technologies to minimize pollutant emissions at our worksites.

Production Operation and Maintenance

POSCO monitors and manages the environmental impacts that occur during the operation and maintenance of production facilities to make improvements. In addition, for reference at work, we have established an environmental management manual for each production process to comply with related laws and to improve the environment.

Production Development, Services, and Logistics

To achieve the net-zero target by 2050, POSCO is making avoided emission efforts by not only reducing greenhouse gas (GHG) emissions at worksites but also by extending its supply of eco- friendly products. We are expanding our portfolio of low-carbon steel products, such as high-tensile steel sheets and high-efficiency electrical steel sheets that contribute to reducing the weight of automobiles. In addition, POSCO strives to minimize greenhouse gases and environmental impacts that may occur during product transportation.

Waste Management

POSCO established and applies waste management guidelines from the waste generation stage to final disposal. The guidelines include work scope, organization and responsibilities, separate collection and storage facilities for waste, and necessary measures in the event of environmental pollution.

Selection and ESG Assessment of Suppliers

POSCO enacted the POSCO Supplier Code of Conduct based on global ESG standards such as the UN Global Compact Ten Principles and the Responsible Business Alliance (RBA), and ensures that its suppliers comply with them. In addition, we reflect ESG factors during the annual supplier performance evaluation to proactively manage environmental risks throughout the supply chain.

New Projects and Mergers & Acquisitions (M&A)

In assessing new business and investment opportunities, POSCO examines expected qualitative and quantitative ESG benefits, as well as investment risks and response measures. Through our environmental management guidelines and environmental impact assessment, we strive to reduce the environmental risks generated by new businesses. In addition, when analyzing an M&A deal, we conduct a due diligence to identify ESG-related risks including the environmental risks and take preemptive actions.

122 POSCO CORPORATE CITIZENSHIP REPORT 2021

Operation of Environmental Management System

Since acquiring the ISO14001 (the international environmental management standard) certification in 1996, POSCO receives annual suitability evaluations from a third party institution and conducts internal inspections at least twice a year under the supervision of the environmental department. The inspection results are reported to the senior management level and incorporated in the creation of environmental strategies and goals.

Environmental Product Declaration (EPD) Certification

POSCO, for the first time in the Korean steel industry, established the Life Cycle Inventory Database (LCI DB) of steel products, which includes the environmental impacts caused during the entire life cycle of steel products. In addition, based on LCI DB, we are promoting EPD certification at home and abroad for the World Premium (WP)4) products produced by POSCO.

1. World Premium (WP): POSCO's own proprietary products that are developed or under development for the first time in the world.

Air Pollution Emission Reduction Policy

To reduce air pollutants, POSCO has established in-house goals that are stricter than the legal standards, and systematically manages its environmental performances.

Water Resources Policy

POSCO strives to manage water resources by optimizing water management and expanding wastewater recycling. As KPIs, we selected surface water consumption reduction and effluent water quality management indicators to manage our performance. To reduce the amount of wastewater, we are increasing the recycling ratio of wastewater discharged from processing. Furthermore, we are monitoring the national water resources policies, anticipating regional regulatory changes, and creating response scenarios to evaluate water supply chain risks before they occur. We operate seawater desalination facilities and reuse treated water from sewage treatment facilities to contribute to resolving water shortages in local communities and securing a stable supply of industrial water.

Our Position on Biodiversity

POSCO understands the importance of biosphere restoration and biodiversity protection, and sets it out in its Practicing Guidelines for the Code of Ethics. Accordingly, POSCO investigates the potential outcomes that its projects may have on biodiversity of the adjacent ecosystems and takes actions to minimize adverse impacts.

New Projects

In carrying out new projects such as facility expansions, we will prevent and minimize factors and causes that threaten biodiversity and if necessary, repair and offset the damage. We will also try to mitigate biodiversity losses and conduct surveys to monitor potential impacts. We will strive to manifest our stance above not only to our worksites but also to our primary and other supply chains.

We are aware of the international conventions on biodiversity and the protection of land (including, but not limited to, the Convention on Biological Diversity, the Ramsar Convention, and the Convention Concerning the Protection of the World Cultural and Natural Heritage) and the IUCN5) Guidelines (including, but not limited to, the IUCN Guidelines for the Protected Area Management Categories and the IUCN Guidelines for Planning and Monitoring Corporate Biodiversity Performance), and we will comply with the national and local legal requirements at our worksites located in the areas where the conventions are applicable. Should our projects cause a damage, reduction, or degradation in the protected areas covered by the international conventions, we will restrict the reach of our worksites and reconsider the project. At our worksites that encompass the natural and important habitats, we will prevent and minimize net losses, change our plans, or investigate alternative areas so as not to adversely affect biodiversity.

Prior to implementing new projects, we conduct environmental impact assessments in accordance with the relevant laws and regulations, and identify and prevent factors that threaten biodiversity, including all endangered species. We ensure that our activities do not negatively impact biodiversity values such as ecosystems and critical habitats. In addition, we only proceed with our projects after consulting with the local residents and communities regarding land use.

5) IUCN: The International Union for Conservation of Nature and Natural Resources.

123 POSCO CORPORATE CITIZENSHIP REPORT 2021