Posco Daewoo Accused of Harming the Environment

Posco Daewo is accused of harming the environment with regard to deforestation in Indonesia’s Papua province.

According to foreign news reports and industry sources, PT Bio Inti Agrindo, a palm oil plantation company owned by Posco Daewoo, has cleared more than 200 square kilometers of forest in Papua since 2013 to harvest palm oil.

Yet environmental groups have campaigned against the deforestation in Papua for years since the land PT Bio Inti Agrindo has been licensed to develop by the Indonesian government overlaps with a World Wildlife Fund Global Ecoregion, which is home to 344 registered bird and 69 mammal species, some of which are endangered and endemic to the area.

In June this year, ABP, the Dutch pension fund for government and education employees, announced it would divest 300,000 euros (about 390 million won) from Posco Daewoo over forest destruction for palm oil in Indonesian Papua.

The announcement by ABP followed a series of media reports in the Netherlands about forest destruction by PT Bio Inti Agrindo.

In May, a Dutch consumer television program aired a 16-minute segment on the ABP’s investment in Posco Daewoo. That same month, the Dutch website Oneworld.nl published its own exposé of the land clearing in Papua.

In 2015, the Norwegian Government Pension Fund Global (GPFG), a global sovereign wealth fund, also divested from Posco Daewoo -- then named Daewoo International -- and from Posco, the parent company, based on the findings of its internal ethics committee.

The Dutch pension fund ABP still has a 157 million euro ($183 million) investment in Posco, so there are concerns that the repercussion may reach Posco as well.

Regarding the controversy, core members of Mighty Earth, an international environmental organization, and Friends of the Earth Netherlands, a Dutch environmental organization, urged investors to stop investing in Posco, saying, “You should stop investing in companies like Posco that are notorious for deforestation.”

Domestic environmental experts note that Posco Daewoo would have to change its business policy and embrace a more sustainable approach, in light of the damage it has done to the image of Korean corporations in general.

Meanwhile, Posco Daewoo prematurely announced on September 2, 2015 that it signed an MOU with Indo Ventures of Thailand to supply US$ 200 million worth of terephthalic acid (PTA). The company faced strong complaints from the Thai firm for jumping the gun. (To read the story, follow the link: http://www.businesskorea.co.kr/news/articleView.html?idxno=12220)