Compliance Program (CP) | Fair Trade | Sustainability

CP Overview

Overview of Fair Trade Compliance Program

Fair Trade CP(Compliance Program)
Prevention of corporate losses
Incentives including reduction of penalty
Enhancement of internal and external credit rating
Global standard
Risk management

What is Fair Trade CP?

It means internal compliance system including education/training and supervision system established and operated
by the company itself in order to comply with Fair Trade Act and Regulations.

Why CP is needed?

Consolidating fair competition and CP operation
- The expansion of CP operation is one of the major goals of the Fair Trade Commission, and CP is especially intended to be expanded to
small and medium businesses through collective adoption by large corporations’ primary partner firms.
Preventing corporate losses according to the violation of the Fair Trade Act
Enhancing internal and external images as a transparent company based on management by principle

Nine Major Components of CP

Autonomous practice by directors
Appointment and operation of CP manager
Drawing up and distribution of CP manual
Operation of CP education program
Building document control system
Punishment of relevant Acts and Regulation-violating employees
Building internal supervision system (core of CP)

Organizing CP Council
Evaluation of CP operation performance

Execution
Overview

Background

The Fair Trade Act seeks to promote the balanced development of the national economy by promoting fair and free competition
between companies, encouraging creative business activities, and protecting consumers.

POSCO A&C published the Fair Trade Manual to comply with the Fair Trade Act and provided employees with the conduct
standard for compliance with the Fair Trade Act. We have been endeavoring greatly to eliminate business practices that breach
the Fair Trade Act cyclically.

As part of such endeavor, we adopted the Compliance Program (CP) in 2009. The CP manager responsible for CP operation is
appointed by the board of directors.

Operation Status

CP Operation Progress

2003. 06 Declared ethical standard / Clarified fair trade compliance will and notified the declaration
and will to all employees

2009. 04 Adopted and implemented Internal Deliberation Committee of Subcontracting

10 Adopted CP

12 Appointed CP manager in the board of directors

2011. 01 Revised of CP operation regulations and guidelines

03 Changed CP Department to Internal Control Department

05 Changed CP manager to Board of directors

12 Signed partnership agreement/ Organized partnership support group

2012. 02 Was evaluated externally on CP operation (acquired CP rating “BBB”)

2013. 11 Was evaluated externally on CP operation (acquired CP rating “A”)

2014. 04 Built process to meet stakeholders

05 Expanded CP organization (Marketing sector)

06 Improved autonomous inspection system in the subcontract sector

Reporting Procedure upon Detecting the Fair Trade Act Violating Activity

Relevant Regulations (Regulations of Fair Trade CP Operation)

- Article 11 (Obligation)
3. Each office head and CP practice leader shall report to the CP manager immediately, when they detect any legislature violation in carrying out their duties.

Reporting Process

Staff in charge (law violation detector)
Department head and CP practice leader
CP manager

Executive in charge

Reporting Method and Details

Reporting method and details table
Details	Reporting Timing	Subject to Report in the First Phase	Subject for Final Report	Reporting Method
Fair Trade Act Violations	Immediately after Recognition	Department Head and CP Practice Leader	CP Manager (Standing Auditor)	First Phase Reporting : Telephone Final Reporting : In Writing

What is Fair Trade Autonomous Inspection?

As a pre-monitoring system of law violations using checklists, this inspection is to let staff inspect violations of fair trade for themselves
on their work so as to prevent the Fair Trade Act violations in advance.

Autonomous Inspection Diagram

Drawing up and distribution of Fair Trade Autonomous Inspection Checklist (CP manager)

Distribution of checklist by sector and violation type
Autonomous inspection by department (CP Council member, practice leader)

Execution in line with department characteristics using the checklist
Counseling·Consultation (Internal Control Department)
Synthesizing and evaluation of autonomous inspection results (CP manager)
Fair trade audit (CP manager)

Auditing at least once annually, centered on weak sector
CP operation improvement·supplementation (CP manager)

CP Rating Procedure

Evaluation in writing
In-depth interview evaluation
Evaluation by visiting company
Evaluation on violation of competition legislature
Evaluation score and rating result analysis

CP Manual

POSCO A&C published the Fair Trade Manual in 1996; thus providing the conduct standard to comply with the Fair Trade Act to its
employees. In 2001, we published the revised manual in reflection of the revised Fair Trade Act. In 2004 and 2005, we published the
[Manual for Fair Trade Compliance in Subcontracting], [Fair Trade Compliance Manual in Unfair Trade], and [Fair Trade Manual for the
Large Corporation Group] for use by the relevant departments by complementing the recently revised laws and regulations, cases, and
Q&A. In 2007 and 2008, we published the [Guidelines for Fair Trade Compliance Conduct in Marketing] and [Guidelines for Fair Trade
Compliance Conduct in Purchase], respectively. Since then, every year, we have been revising or newly publishing the following to help
working-level employees: [Fair Trade Manual for the Large Corporation Group], [Fair Trade Compliance Manual in Unfair Trade and
Terms and Conditions], [Guidelines for Fair Trade Compliance Conduct in the Marketing Sector], [Guidelines for Fair Trade Compliance
Conduct in Purchase], [Autonomous Inspection Manual for Fair Trade], and [Integrated Manual for POSCO Family].