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Last update: 2016-04-02 00:00:00 BankTrack
Yann Louvel, climate and energy campaigner
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Update: as of March 2017, POSCO has abandoned its plans for a steel plant in Odisha, in a significant victory for everyone that struggled against the project for many years.
POSCO, a South Korean multinational corporation and the world's fourth largest steel producer, sought to establish an integrated steel venture in India's eastern state of Odisha. POSCO, via its wholly-owned and operated subsidiary POSCO-India Pvt. Ltd, planned to invest approximately US$12 billion in the project, which would have made it the largest single instance of foreign direct investment in India to date.
The proposed POSCO-India project consisted of iron ore mines, a steel processing plant, a captive port facility, and related transportation and water infrastructure. It was planned to have a production capacity of 12 million tons per year and would require 600 million tons of iron ore over 30 years. It would use over 12,000 acres of land, including 4,004 acres for the steel processing plant and port in coastal Jagatsinghpur district, 2,000 acres for a company town and associated infrastructure and a further 6,177 acres for the iron ore mine in an area roughly 200 km inland known as Khandadhar Hills. The company additionally sought an unspecified amount of land to facilitate transportation of millions of tons of raw materials and to supply the water needed for the processing of the steel.
The project made little progress in part due to significant and sustained opposition from affected communities who have used non-violent protest and democratic processes to resist their forced evictions from lands that they have cultivated for generations. The project threatened to displace over 22,000 people in the plant and port area alone, and thousands more face destruction of their livelihoods.
The government of Odisha entered into a Memorandum of Understanding (MoU) with POSCO on June 22, 2005. Since then, Odisha has taken numerous steps to help ensure the project moves forward. For example, it agreed to support designation of the proposed project area as a Special Economic Zone (SEZ), which affords POSCO significant tax breaks among other benefits. In 2005, POSCO committed to pay Odisha a royalty of Rs. 27 (approx. US$0.46) for each ton of iron ore that it extracts. In May 2013, the market value of a ton of iron ore was US$124.32.
Odisha also agreed to facilitate "all environmental approvals and forest clearances from the Central Government within the minimum possible time for the project." In June 2007, India's Ministry of Environment and Forests (MoEF) granted environmental clearances for the project plant and port despite concerns about how POSCO conducted its rapid environmental impact assessments (rapid EIAs). A local environmental activist appealed in 2011 to India's National Green Tribunal ("NGT"), a specialized body set up to handle environmental disputes and deliver "speedy environmental justice." In March 2012, the NGT suspended the environmental clearance of the MoEF, calling for "a fresh review of the Project" due to multiple concerns with the original environmental impact assessment. The NGT then reiterated the project's lack of environmental clearance in May 2013, and ordered POSCO to cease deforestation activities. Despite the NGT ruling, and the fact that the MoU for the POSCO-India project expired in 2010, efforts to acquire land for the project continue.
Since the signing of the MoU, the POSCO-India project has given rise to a formidable grassroots resistance. Formed in August 2005, the POSCO Pratirodh Sangram Samiti (Anti-POSCO People's Movement, "PPSS") is a local social movement that represents the residents of areas that stand to be directly affected by the steel plant and captive port project. The PPSS has undertaken numerous efforts to participate in decisions related to the POSCO-India project and express their concerns about the government's forcible acquisition of land. They have carried out protests and lengthy non-violent sit-ins, or dharnas, participated in village resolutions denying consent for diversion of forested land, made submissions to government committees, issued press statements and held events in New Delhi, the capital of India. They have also, together with their allies, filed an OECD complaint against the Dutch National Civil Pension Fund (ABP/APG) and the Norwegian Government Pension Fund - Global (GPFG).
What must happen
The Government of India, the Government of the Republic of Korea, the POSCO Corporation, and all of POSCO's investors must take immediate action to ensure the protection of human rights in connection with the POSCO-India project.
The Government of India should:
- Suspend the POSCO-India project until and unless international human rights standards are fully complied with.
- Ensure full implementation of the provisions of the Forest Rights Act and cease all land clearance and acquisition until and unless the rights claims of forest-dwelling communities are adjudicated and recognized rights-holders consent to the diversion of forest land.
- Take decisive steps to ensure that police officials act in accordance with international standards on the use of force and do not engage in arbitrary arrests and detentions.
- Provide effective protection for project-affected communities against acts of violence committed by private actors.
- Ensure project-affected communities unencumbered access to work, adequate food, healthcare, and education services
- Ensure that the living conditions in the POSCO-India Transit Camp abide by international human rights standards.
- Devise a permanent resolution to the temporary housing situation of Transit Camp residents, in a manner that realizes their right to an adequate standard of living and involves their informed consent.
The Government of the Republic of Korea should:
- Take all necessary steps to ensure that POSCO respects human rights throughout the course of its activities, including in its projects in India.
- Establish a legislative framework that requires companies domiciled in Korea, such as POSCO, to adopt measures to prevent and mitigate adverse human rights impacts in their operations overseas.
- Ensure access to effective judicial and non-judicial remedies for those affected by the POSCO-India project.
- Avoid facilitating or investing in projects that fail to meet human rights standards.
- Prevent or mitigate adverse human rights impacts that are directly linked to its operations in India, even if it has not caused or contributed to those impacts.
- Ensure compliance with Indian laws and regulations.
- Ensure that the corporation's commitment to upholding international human rights standards is clearly communicated in all business relationships and fully implemented by company officials.
- Provide for or cooperate in the remediation of any adverse impacts to date.
All investors in POSCO, including ABP, Berkshire Hathaway, Blackrock, Deutsche Bank, JPMorgan Chase, NBIM, and Bank of NY Mellon should:
- Take reasonable and prudent measures to ensure that POSCO: respects human rights throughout its operations; complies with domestic law; and seeks to prevent or mitigate adverse human rights impacts that are linked to its operations.
- Consider withdrawing their investment if POSCO does not fully comply with human rights standards
The acquisition of land for the project will destroy the thriving local economy and the livelihoods of thousands of local residents, and will result in the effective displacement of the area's 22,000 residents. Many of those at risk of displacement are farmers who have cultivated plots of land for generations, yet many of them do not possess formal title. Although many villagers have applied to have their claims over forest lands recognized under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, the process is rife with red tape, and residents have met with limited success.
Thousands of non-residents - including Dalits - who participate actively in the local economy also stand to lose their source of income. The proposed port threatens access to the sea, which provides food and jobs for residents and non-residents alike. Some reports indicate that the livelihoods of as many as 20,000-25,000 local fishermen stand to be negatively affected by the project. Thousands more stand to be affected at the proposed mining site in Odisha's Khandadhar Hills, Sundargarh district, which are popular with local tourists for their beauty and powerful waterfalls. The area's Khandadhar forest is also home to the Paudi Bhuiyans, a vulnerable indigenous (tribal) group that sustains itself from the forest, either by cultivating rice and indigenous lentils and grains on fixed plots of land, or by practicing a shifting agriculture method known as podu
Actions taken by the Government of India to promote the POSCO-India project have resulted in the violation of a range of human rights - including economic, social and cultural rights . Mounting social conflict around the project has lead to numerous acts of violence against people opposing the POSCO steel plant, leading to multiple injuries and several deaths. People living in project-affected communities have been effectively trapped in their villages by ongoing threats of violence and baseless arrests and the continued police presence in their area. Living in a state of siege, they face substantial barriers to their ability to work, access health care, educational facilities or other essential services. This has also disrupted local social and cultural practices, impeding people from attending weddings or religious events or maintaining other social ties.
The POSCO-India project has given rise to significant concerns related to the diversion of the local water supply and to environmental impacts, including potentially irreversible effects on endangered species and on coastal sand dunes that act as natural barriers against powerful storms. Many species of animals live and breed in the area's waters, lush estuaries, and dense forest.
The construction of the proposed plant and port threatens the area's unique biodiversity. The site of the proposed captive port includes beaches, which serve as a nesting site for over 100,000 endangered olive ridley turtles every year, one of only three such sites worldwide and the only site in the Eastern Hemisphere. Ecologically important horse shoe crabs also depend on the sediment along the coast in the port area, and fish and shrimps use the estuaries and coastal waters as breeding grounds. There also exist well-founded concerns regarding air pollution and the diversion of water resources. POSCO has already received approval from Odisha's Department of Water Resources for the daily withdrawal of 10 million gallons of water from sources that supply drinking and irrigation water to the nearby cities and districts. The construction of the proposed plant and port will also destroy the coastal sand dunes that act as natural barriers against powerful storms, the removal of which would leave the area more exposed to the harmful effects of powerful storms.
In March, 2012, India's National Green Tribunal ("NGT") suspended the environmental clearance granted to POSCO due to serious inaccuracies with the company's environmental impact assessments. A final determination by this Tribunal is expected in September of 2013.
Ongoing and systematic human rights violations are taking place in the area proposed for the integrated steel plant and captive port, as well as in POSCO-India's Transit Camp. There is evidence of significant and ongoing attempts to illegally evict people from their lands, as well as serious abuses against individuals and communities who are resisting forced eviction and defending their human rights.
Human Rights Violations in Project-Affected Communities: Indian authorities have targeted people who speak out against the POSCO-India project with violence, arbitrary arrests and detentions. Police forces have barricaded villages, occupied schools, leveled thousands of fabricated criminal charges against individuals opposing the project, and failed to protect individuals from attacks by project supporters. As a result of these abuses, for the past eight years, entire communities in the project-affected area have been living under siege and have suffered clear violations of their rights to security of person and freedom of movement. The right to be free from arbitrary arrest and detention, and the right to be free from discrimination-particularly on the basis of political or other opinion, have also been violated. This has also affected a host of economic and social rights, including the right to work, health, education, and food. Generally, should the project move forward as planned, displaced communities face a serious risk of impoverishment, which in turn would undermine a range of human rights and their ability to live a life of dignity.
Human Rights Violations in Transit Camp:Since leaving their villages, the fifty-two families currently residing in the POSCO-India transit camp have suffered dramatic declines in their enjoyment of the right to adequate housing, food, water, health, education, and work. Residents live in cramped one-room homes with roofs containing asbestos. The houses fail to protect residents heat and rain and pose serious health risks. While they previously enjoyed access to abundant, clean water in their villages, residents now share one tubewell and complain of irritation to the throat and skin upon contact with the water. The sanitary facilities are limited and in poor condition, and women and girls lack privacy when bathing. According to an official investigation of the National Commission for Protection of Child Rights (NCPCR), Indian authorities have failed to ensure access, by residents in the Transit Camp, to essential health care, educational, and child welfare services, which has had an acute impact on children residing in the camp. Relocation to the Transit Camp-located far from work opportunities or land on which to farm-has impoverished residents and pushed previously self-sufficient families into economic dependence. Without sufficient employment opportunities they are forced to rely on a daily allowance provided by POSCO: Rs. 20 (approximately US$0.33) per person, an amount that is grossly insufficient to meet their needs and the needs of their families. There is no public evidence to suggest that POSCO has attempted to rectify the sub-standard living conditions in the Transit Camp.
Anticipated additional human rights threats if the project goes forward
If the POSCO project in Odisha proceeds as planned, and the forcible acquisition of lands results in the anticipated displacement and evictions, project-affected people will face serious threats to their ability to realize the right to food, right to adequate housing, the right to health, right to education and the right to work. The Government of India and POSCO have failed to guarantee compensation that is adequate in nature and scope and effectively guards against impoverishment and serious declines in the standard of living of people affected by the project.
Women living in the project-affected villages have been severely affected by the repression of people opposing the POSCO-India project. They have been the targets of violet attacks and have suffered serious medical problems as a result of their inability to access adequate health care facilities. Women and girls who are members of project-displaced households living in the POSCO-India Transit Camp have suffered severe declines in their living standards, including the inability to bathe or use sanitary facilities in privacy.
Women residing in project-affected communities have expressed concerns that the POSCO-India project will contribute to a gender gap in employment opportunities. Betel leaf cultivation, the mainstay of the local economy, employs both men and women and allows all adult members of the community work under conditions of equality. While individuals and families displaced or affected by the POSCO-India project will be eligible for employment in the steel plant, families may only nominate one person to be considered for employment. The Ministry of Environment and Forests (MoEF) Committee on the POSCO-India project noted that it is likely that women and young people will largely be overlooked for employment in the steel plant because they lack the skills and education necessary to get jobs with POSCO-India. Although the project authority must make "special efforts to facilitate skill up-gradation of the nominated member of the displaced family to make him/her ‘employable'," it is not clear how these efforts would sufficiently eliminate a gender gap in employment opportunities.
Other applicable regulations
JP Morgan Chase
According to its Human Rights Statement, JP Morgan Chase "supports fundamental principles of human rights across all [its] lines of business and in each region of the world in which [it] operate[s]". Additionally, JP Morgan Chase believes it "can play a constructive role in helping to promote respect for human rights by [its] own actions and by seeking to engage with the governments of the countries with and in which [it] operate[s]".
In JP Morgan's Code of Conduct, President and CEO Jamie Dimon makes the following introductory remarks: "At JP Morgan Chase, our strong reputation is our most fundamental asset and one that can only be preserved by each of us and what we do every day on behalf of the Company. We act with integrity because it's the right thing to do for our customers, our shareholders, the industry and the larger community [...] Harm to our reputation affects the entire Company and is enduring. Any perceived ethical transgression, no matter how isolated or minor, can damage our Company".
By its Code of Responsible Conduct for Business, Deutsche Bank AG has committed itself to the principle that "business must serve the good of the people." Deutsche Bank's Code elaborates that "the competition between communities and countries to attract business and the consequences of social change have led to a ‘devaluation' of familiar, traditional ways of working. At the same time, the demand for other ways of working is increasing. This leads to progress and benefits, but it also causes hardships. We are committed to avoiding these hardships as far as possible, or at least to limit their consequences, in cooperation with our social partners and state institutions."
Deutsche Bank is also committed to international agreements such as the OECD Principles for Multinational Enterprises and the UN Global Compact Principles. The OECD Principles state that businesses should "avoid causing or contributing to adverse human rights impacts and address such impacts when they occur", as well as "seek ways to prevent or mitigate adverse human rights impacts that are directly linked to their business operations, products or services by a business relationship, even if they do not contribute to those impacts." The National Contact Point of the Netherlands recently stated that it "The NCP would like to emphasis that the Guidelines are applicable to financial institutions and to investors, including minority shareholders. The NCP finds that the term "business relationship", as referred to by the Guidelines, is applicable to financial relationships". Similarly, according to Deutsche Bank's commitment to the UN Global Compact, it is required to "support and respect the protection of internationally proclaimed human rights" and "make sure [it is] not complicit in human rights abuses".
Deutsche Bank has remarked, "business can only perform its role of social cooperation in the service of the people if all of those involved live up to their responsibilities. For us, corporate responsibility primarily means that we have to be reliable and keep our promises. We must keep to the rules and pursue any infringements of the rules as far as we are able".
BNY Mellon has committed itself by its Human Rights Statement “to the protection and preservation of human rights around the world” and that BNY Mellon’s commitment to human rights is reflected in its “policies and actions toward [its] employees, suppliers, clients and the communities and countries where [it does] business.” Additionally, BNY Mellon strives “to create an environment of respect for all individuals” and believes that, through its actions, the company can “be a constructive influence for human rights.”
BNY Mellon’s Code of Conduct defines ‘doing what’s right’ as “conducting business in full compliance with all applicable laws and regulations, and in accordance with the highest ethical standards” and “being willing to take a stand to correct or prevent any improper activity or business mistake.” In addition, the Code of Conduct reminds all employees at BNY Mellon that “It’s your obligation to do what’s right” and that employees should ask themselves, “Could the action affect the company’s reputation?” or “Would it look bad if reported in the media?”
According to BNY Mellon’s CSR Statement, “CSR is fundamental to BNY Mellon's culture and core values. It reflects the corporate social and environmental sustainability commitments we make to our clients, shareholders, employees and to our communities around the world. These commitments drive us to perform with the highest standards of good governance and ethics[...] and improve the social and environmental impacts of our business practices and those of our suppliers” (http://www.bnymellon.com/about/humanrights.html )
POSCO closes last chapter in Odisha project
South Korean steel major POSCO has scrapped the plan to set up a 12-million tonne steel mill in Paradip, Odisha. It has written to the state government that it wants to surrender the land allotted for the project (source business-standard.com). The formal closure of Posco’s steel plant project in Odisha is seen as a victory of agrarian economy over unwanted industrialization and the betel leaf farmers of Jagatsinghpur are rejoicing, although those who lost their land face new challenges.
Nowegian and Dutch contact points publish final statements
The Norwegian NCP published its final statement in the POSCO/NBIM case on 27 May 2013, and the Dutch NCP issued its final statement on the same day. The case set an important precedent regarding the applicability of the OECD Guidelines to the financial sector. The Dutch NCP confirmed that the OECD Guidelines also apply to minority shareholding of financial institutions.
OECD complaint filed
On October 2012, an OECD complaint was filed against the Dutch National Civil Pension Fund (ABP/APG) and the Norwegian Government Pension Fund - Global (GPFG).
(1) Dutch National Civil Pension Fund (ABP/APG) - ABP/APG has shares in POSCO worth approximately € 17m and is cooperating with the Dutch National Contact Point. On 06 March 2013, a joint statement was issued in which APB/APG confirmed they are "committed to using their influence to make POSCO's activities and practices consistent with international principles and standards." On 13 March 2013, the Dutch NCP issued a preliminary statement, which confirms that the OECD Guidelines "are applicable to financial institutions and to investors, including minority shareholders." It also clarified that the term "business relationship" applies to financial relationships. The Dutch NCP is currently attempting to set up an evaluation and research mission and is seeking to ensure that the mission is jointly commissioned with the Norwegian and Korean NCPs.
(2) Norwegian Government Pension Fund Global (GPFG) - GFPG is managed by the Norwegian Bank Investment Management (NBIM) on behalf of the Norwegian government and owns 0.9 per cent of POSCO. Arguing that the OECD guidelines do not apply to minority shareholders, NBIM has refused to cooperate with the Norwegian National Contact Point in its assessment of whether NBIM is violating human rights through its investment.