Growing Local Demands Deepen Deliberation
Social Responsibility Management as a Key Issue
[Asia Economy Reporter Oh Hyung-gil] As ESG (Environmental, Social, and Governance) management emphasizing corporate social responsibility accelerates, resolving conflicts with local residents is emerging as a major issue in the industrial sector. Companies are responding by strengthening communication with local communities.
According to the industry on the 4th, Hyundai Oilbank is facing conflicts with local small business owners over unpaid construction fees ahead of the operation of the Heavy Oil Petrochemical Cracking Facility (HPC) at its Seosan plant. This is a large-scale petrochemical project worth 3 trillion won, jointly invested with Lotte Chemical, aimed at reducing the sales proportion of refining business and strengthening non-refining businesses, but controversy over unpaid construction fees arose just before the Lunar New Year holiday.
As subcontractor companies participating in the construction have not received settlements amounting to hundreds of billions of won and are facing bankruptcy, even nearby small business owners, who are greatly affected by the local ecosystem, are directing criticism not only at the construction companies but also at Hyundai Oilbank.
Hyundai Oilbank maintains the position that "since it is an EPC (Engineering, Procurement, and Construction) contract, the payment responsibility to partners lies with the project owner," but as subcontractors demand resolution from the original contractor, protests and conflicts are showing signs of prolongation.
POSCO, which recently succeeded in transitioning to a holding company system, is also suffering from excessive demands from the Pohang local community. Conflict was triggered when POSCO Holdings headquarters and the Future Technology Research Institute were planned to be established in Seoul.
On the 28th of last month, members of the Gyeongbuk Provincial Council from the Pohang area visited the POSCO Center in Seoul, where the POSCO extraordinary shareholders' meeting was held, protesting against the holding company's establishment in Seoul and delivering a letter demanding that POSCO Holdings and the research institute be established in Pohang.
Moreover, Yoon Seok-yeol, the presidential candidate of the People Power Party, stated, "The concentration of large corporations in the metropolitan area accelerates the extinction of local areas and can lead to a decline in national competitiveness," and expressed a clear opposition to the establishment of the POSCO holding company in Seoul, turning the issue into a political offensive.
POSCO is considering measures to persuade the local community under the policy of continuous communication with the local society. Previously, POSCO decided to actively communicate with the local community by establishing an ‘ESG Committee’ under the board of directors of its steel subsidiary, which has close ties with the local community, to enhance the ESG response capabilities of its subsidiaries.
An industry insider said, "Large-scale process industry companies play a significant role throughout the local community and have been conducting volunteer and donation activities in the region for decades," but added, "However, the demands of local residents have recently increased to the extent that they affect management issues, which is becoming a burden."
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