National Pension Service remains cautious over Myanmar crisis

The National Pension Service (NPS)' Investment Management headquarters in Jeonju, North Jeolla Province / Courtesy of NPS

By Park Jae-hyuk

The National Pension Service (NPS) is maintaining silence on POSCO's businesses in Myanmar.

Amid the steelmaker's continued denial of its ties with the Southeast Asian country's military junta, the state pension service appears to be facing a dilemma, as European institutional investors have begun urging POSCO and other global enterprises to leave Myanmar, in order to prevent possible inflows of cash to the junta.

According to the Financial Times, Park Yoo-kyung, an adviser of the Dutch pension fund, APG, which manages $668 billion, raised questions about POSCO's commitments to responsible investments, saying that a lot of investors are putting pressure on the company.

Reuters reported that Sweden's public pension fund, which owns POSCO shares, asked the firm about its investments in Myanmar, out of concern over human rights issues there. According to the news agency, Helsinki-based financial group Nordea also told the Swedish arm of Oxfam's Fair Finance Network that it had put POSCO “in quarantine until further notice,” due to its ties in Myanmar.

In response, POSCO has emphasized that POSCO Coated & Color Steel has not paid dividends since 2017 to Myanmar Economic Holdings Ltd. (MEHL), which is under control of the junta. POSCO is reportedly reconsidering its partnership with MEHL, which owns a 30 percent stake in the steel plate manufacturer.

An NPS spokesman said that the pension fund has nothing to say about the issue at this moment.

Civic groups here, however, have called for the NPS, as the largest shareholder of POSCO with an 11.75 percent stake, to stop its investments in the steelmaker unless it cuts its ties with the Myanmar junta.

Some of them cited the environmental, social and corporate governance (ESG) criteria, considering the fact that human rights issues are social factors, and that the NPS has concentrated on making sustainable investments.

“POSCO's largest shareholder is the NPS, which is run by money paid by Korean people,” the Manifesto for Global Citizenship said. “This fact means that the money paid by Korean people has flowed into the Myanmar junta. Korea should be in solidarity with the Myanmar people and take responsibility for having funded the coup.”

During the annual shareholder proxy season last month, civic groups also urged the NPS to vote against the reappointment of POSCO chief, but the pension fund remained neutral about this topic.

“After careful deliberation, we decided to be neutral because there was no clear reason to oppose his reappointment, although we thought it was inappropriate to support it, considering the enactment of laws that hold CEOs responsible for industrial accidents,” the NPS said at that time without mentioning the Myanmar issue.

People's Solidarity for Participatory Democracy expressed its disappointment with the decision, calling for the NPS to demand that POSCO hold an extraordinary general meeting of its shareholders to appoint a nonexecutive director to protect the public interest.