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
Minimize damage from violations of the law

Eight Major Components of CP

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 Introduced and implemented Internal Deliberation Committee of Subcontracting

10 Introduction of CP(Compliance Program)

2010. 01 Appointed CP manager in the board of directors

12 Production of compliance manuals

2011. 01 Established of CP operating regulations and guidelines
Introduction of standard supplier agreement

02 Changed CP manager in the board of directors

04 Change the department dedicated to the CP(Management Support Office → Internal Control Department)

06 The 1st revision of compliance manuals

12 Signed partnership agreement/ Organized partnership support group
External assessment of CP operations (acquired CP rating “BBB”)

2012. 11 External assessment of CP operations (acquired CP rating “A”)

2014. 03 Changed CP manager in the board of directors

04 Establish a stakeholder meeting process

06 Expanded CP organization (Marketing sector)

12 External assessment of CP operations (acquired CP rating “A”)

2015. 07 Construction of a reporting center

2016. 01 Introduction of Clean POSCO system

06 Revision of CP operating regulations and guidelines

12 External assessment of CP operations (CP grade assessment corresponding to "A" grade)

2017. 03 Changed CP manager in the board of directors

2019. 03 Changed CP manager in the board of directors

2022. 01 The 2nd revision of CP operating regulations and guidelines

02 Revision of a reporting center

03 Changed CP manager in the board of directors

05 The 3rd revision of CP operating regulations and guidelines

08 The 10th revision of compliance manuals

2023. 01 The CEO's willingness to comply with the CP is declared again
Implementation of a pledge to comply with CP for all executives and employees

03 The 4th revision of CP operating regulations and guidelines

05 Conduct a self-compliance council(1st) organized by the CP manager

07 CEO asks employees to 'settle a culture of fair competition' in 53rd anniversary speech of the company's foundation

09 Certified by the Anti-Corruption Management System (ISO37001)

10 Conduct a self-compliance council(2nd) organized by the CP manager

12 External assessment of CP operations (acquired CP rating “AA”)
Conduct CP related rewards

Frequently Conduct fair trade education in consideration of business relevance
Implementation of internal deliberation on subcontracting transactions
Pre-audit of private contract
Sanctions on executives and staff members who breach the law related to fair trade

Quarterly Report the status of CP operation

Reporting Procedure upon Detecting the Fair Trade Act Violating Activity

Relevant Regulations (Regulations of Fair Trade CP Operation)

- Article 15 (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)
Members of self-compliance council (Department Head and CP Practice Leader)
CP Manager or Department in charge of CP

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	Members of self-compliance council (Department Head and CP Practice Leader)	CP Manager or Department in charge of CP, Executive	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 a half year, centered on weak sector
CP operation improvement·supplementation (CP manager)

CP Manual

POSCO A&C produced its own Fair Trade Self-compliance Manual in June 2011 and provided executives and employees with behavioral standards for compliance with the Fair Trade Act. Since then, POSCO Family has jointly revised the law and its practical cases to support active use of the manual throughout September 2012 and July 2014.

In addition, as supplementary materials for the manual, [Subcontracting Fair Trade Compliance Manual], [Fair Trade Compliance Manual in the Fair Trade Sector], [Marketing Division Fair Trade Compliance Action Guidelines], and [Business Management Guidelines] were published. In 2014, [Bidding Compensation Prevention Action Guidelines] were produced to reflect major issues related to fair trade.

In August 22, we issued and distributed a newly organized manual revision with the latest law revisions, cases, and precedents so that executives and employees can use it when performing subcontracting-related tasks.