Despite calls from civil society, a damning report on public health impacts, and an imminent lawsuit against its greenwashing, Korean steelmaker POSCO is not backing down on its plans to extend the lifetime of two of its coal-based blast furnaces by 20 years (1). As a consequence, BankTrack and Solutions for Our Climate are together calling on banks to rule out future finance for the Korean steelmaker unless it scraps its relining plans.

“POSCO's relining plans will keep its polluting, coal-based steelmaking plants on life support when cleaner alternatives exist. Unless POSCO demonstrates its commitment to a 1.5ºC-aligned pathway through its capital expenditures, banks should withhold future finance, and rather prioritise other, more ambitious and climate friendly steelmakers in their portfolios.” said Julia Hovenier, Banks and Steel campaigner at BankTrack.

Last December, BankTrack sent letters to POSCO’s 13 largest financiers notifying them of its relining plans, and calling on them to engage with the company to stop the reline. Together, the 13 banks – ANZ, BNP Paribas, Standard Chartered, HSBC, Bank of America, Citigroup, KB Financial Group, Crédit Agricole, JPMorgan Chase, SMBC Group, Mitsubishi UFJ Financial, Goldman Sachs, and Mizuho Financial – have provided over $10 billion in debt financing to POSCO since 2016. 

Citing “client confidentiality”, none of the responses from banks confirmed that they would engage with POSCO on their relining plans. However, five banks – Mizuho, HSBC, BNP Paribas, Crédit Agricole, and Standard Chartered – indicated that they are actively engaging with their steel clients which are not aligned on a 1.5°C trajectory, and would be assessing their exposure to emissions-intensive clients/assets. KB Financial Group, JPMorgan Chase, MUFG, and notably, Sustainable Steel Principles signatory Citi did not respond, throwing the integrity of their steel decarbonisation commitments into question. 

"With the upcoming selection of POSCO's new CEO, financiers need to keep an eye on whether the steelmaker takes a step in the right direction by prioritising climate in its new strategic vision. If the company continues to rely on coal for steelmaking, it will face a heavy reputational and financial risk as its competitors accelerate their transition to renewable-based technologies.” said Heather Lee, Steel Lead at Solutions for Our Climate (SFOC).

To prevent worsening the ongoing climate and public health crisis in South Korea, we’re calling on POSCO’s financiers to:

• Use their leverage to convince the company to cancel the planned relining of the Gwangyang Blast Furnace No. 2,  and instead support it to replace it with new, low-carbon facilities, while disclosing a clear emission reduction plan.
• Require POSCO to publicly disclose a carbon emission reduction plan for Pohang Blast Furnace No. 4, which is currently undergoing relining.
• Call on POSCO to publicly disclose a phase-out plan for each of its domestic and global blast furnace facilities, as well as a plan to genuine green steelmaking in line with its carbon neutrality roadmap 
• Adopt a corporate-level policy that immediately prevents the bank from onboarding new steel clients which are investing in blast furnace relinings, and excludes finance for existing steel clients that do so.

Notes: 

1. Relining is heavy maintenance on a steel furnace to keep it running for another 20+ years. 

2. See our letter to POSCOs financiers here

3. See the responses from POSCOs financiers here:​

   • BNP Paribas
   • Crédit Agricole
   • Goldman Sachs: Confirming receipt, but we will not have a statement to provide for the record on your website.
   • HSBC: Our duty of client confidentiality prevents discussion of specific cases or clients however, at HSBC we have set a target to reduce the emissions intensity of our iron, steel, and aluminium portfolio to 1.05 tCO2 per tonne of metal produced by 2030. This represents a 42% reduction versus the 2019 baseline. The target is based on the IEA NZE 2021 scenario which is a global 1.5°C pathway. Due to the challenges of decarbonising this hard-to-abate sector, on publication of our target we outlined the alternative reference scenario from the Mission Possible Partnership (MPP). Although the MPP scenario is also 1.5°C-aligned, it models a delayed decarbonisation pathway for the sector that indicates a 21% reduction to 2030 with steeper declines thereafter.  Recognising the sector’s high dependency on nascent technologies and enabling policy, we may consider moving to a 2030 target range for the sector’s financed emissions in the future. We plan to update our targets following the periodic release of new net-zero-aligned scenarios to ensure they reflect the most up-to-date science and real economy developments. For example, we note that in the updated IEA NZE scenario released in 2023, the iron and steel sector emissions intensity reduction is lower by 2030 than in the 2021 release as a result of slower deployment of alternative lower carbon technologies, with more decarbonisation pushed into the 2030 period. The scenario now expects a 25% reduction in emissions intensity by 2030 from the 2019 baseline versus 36% in the IEA NZE 2021 scenario.Engagement on the transition will be a vital part of our approach to support our clients to decarbonise and diversify their energy supply, production and business models. Such engagement will be critical to determine their appetite, ability and plans to decarbonise, consistent with HSBC’s portfolio-level efforts to meet its NZ50 Target.
   • Mizuho Financial: Unfortunately, we cannot make responses on past, existing, and possible future transactions with individual case due to the confidential obligation. However, we will share the opinions we received with the relevant departments. Mizuho takes appropriate measures in accordance with our policies such as the Environmental and Social Management Policy for Financing and Investment Activity, disclosed here; Regarding our approaches in steel sector, please kindly refer to pages 43, 62-65 of the TCFD report, disclosed here
   • SMBC Group: Thank you very much for sending us the letter.We are unable to comment on specific companies/projects, but we have shared the information within our organization.
   • Standard Chartered: Due to client confidentiality, we are unable to comment on specific relationships, however, all of our client relationships are guided by our position statements on environmental and social risk. This includes alignment with our Climate Change Position Statement which expects all clients in high-carbon sectors to have a strategy to transition their business in line with the goals of the Paris Agreement; and the same clients to report on current greenhouse gas emissions, preferably in line with TCFD. Our statement on the manufacturing industry (which includes steelmaking) is available here: Chemicals and manufacturing - Standard Chartered (sc.com) and our Climate Change Position Statement can be found here: Position on Finance and Climate Change | Standard Chartered (sc.com). As you have acknowledged, we do have a commitment to reduce our steel portfolio’s (Scope 1 and 2 intensity) average emissions intensity by 33% by 2030. At a client level, we review a client’s approach to transition using the output from our client Climate Risk assessments. In particular, we utilise a client’s Transition Risk mitigation score, which considers both quantitative inputs (e.g. emissions measurement data and reduction targets), and qualitative overlays through direct client conversations to assess management focus and commitment. We aim to support and guide our clients to a low-carbon pathway and offer them sustainable financing as the main levers to help us achieve our net zero targets. We will also be assessing our exposure to emissions-intensive clients and/or assets and will seek to replace these over time by adding new low-carbon-intensity clients and/or assets to our portfolio. This does not mean walking away from our existing clients, but instead working with them to finance investment in low-carbon methods and technologies, particularly across Asia, Africa and the Middle East where investment could have the biggest impact. You can learn more about our net zero approach via our online hub: https://www.sc.com/en/sustainability/net-zero.