Faculty Petition to TIAA-CREF

Roger W. Ferguson, Jr.
President and Chief Executive Officer
730 Third Avenue
New York, New York 10017-3206

We write to ask TIAA–CREF to critically examine its investment in POSCO, the South Korean steel giant, and withdraw its investments on the grounds of POSCO’s human rights and environmental record in the state of Orissa, India. All of the various parts of POSCO’s massive project – mining in captive iron ore mines, construction of a steel plant and of a captive port have disastrous consequences for the forest-dwelling (Adivasi/indigenous and non-Adivasi) communities in the project areas.

We believe that we have a duty to critically evaluate the POSCO project, and our research into the particulars of the project reveals an unacceptable pattern of wrongdoing and exploitative behavior which are incommensurate with fundamental norms and practices of ethical conduct, including the principles of Socially Responsible Investing (SRI) which TIAA-CREF subscribes to. Consider the following three issues:

1. Repeated Falsification of Data

  • POSCO’s claims of employment generation from its project have been proven to be gross exaggerations. While POSCO has claimed the creation of 900,000 jobs, analysis of these figures by the Mining Zone Peoples’ Solidarity Group shows that a very maximum of 48,000 jobs will be created over the next 30 years.
  • Secondly, POSCO has failed to disclose that its oft-repeated claims of the “benefits” of the project, deployed to justify the project, issue from a study by NCAER (National Council of Applied Economic Research) that POSCO had itself paid for! We cannot in good conscience permit ourselves and TIAA-CREF to be party to such brazen manufacturing of false data, or such cynical manipulation of the apparatus of social science research.
  • The cost-benefit analysis in NCAER’s study violates guidelines by the Asian Development Bank which NCAER purports to follow, and which require that such analyses must recognize the costs of lost homes and livelihoods, and of lost access to forests, rivers, etc. NCAER’s analysis also fails to account for the social effect of the elimination of jobs on the well-being of the local community. In other words, NCAER’s conclusions about the benefits of the POSCO project are made possible by the study’s partial as well as biased calculation of the costs of the project.
  • Finally, the harm caused to the local environment, the local community, and to the local economy have been misrepresented given that POSCO chose to perform a “rapid” (of a duration of 3 months) Environmental Impact Assessment (EIA), rather than a comprehensive one (of a duration of 12 months) which would have resulted in more comprehensive, and hence more accurate data about the impacts of the project.

2. Illegalities and Corruption of Process in the Project Approval Process

  • The environmental clearances obtained by POSCO are not only fraudulent but also illegal as they violate numerous Indian environmental laws with reference to protection of wildlife, marine life, public health, etc., including the laws meant to protect its coasts and beaches. A comprehensive rather than a “rapid” EIA is also a requirement under Indian Law.
  • The public hearing process which offers the local community an opportunity to voice their concerns was compromised by the presence of police. Local, national and international groups have protested this vitiation of process, and the “connivance between the state and POSCO to manufacture consensus without the consent of those affected.”
  • POSCO is gearing up to proceed with the project, although, six years after the initial Memorandum of Understanding was signed in 2005, no environmental impact assessment has been performed in the Khandadhar forests where the mining operations will be located, and which is home to many Adivasi (indigenous) communities.

3. Complicity in violation of democratic norms and human rights abuses including use of physical violence

  • POSCO’S claim to over 3,000 acres of forest land for the steel plant is a direct assault on local people’s struggle for recognition of their land rights via the use of landmark legislation such as the Forest Rights Act of India (2006). TIAA-CREF’s policy statement on corporate governance states that "[c]ompanies should pay heightened attention to human rights in regions characterized by conflict or weak governance, while it may be more appropriate to emphasize legal compliance in stable countries with well-functioning governments and regulatory systems in place." Given that POSCO and the Government of Orissa are running roughshod over all processes and legal obligations to evict the peasants of Jagatsinghpur and the indigenous communities of the Khandadhar hill tract, TIAA-CREF must, to remain in compliance with its own policy, divest from POSCO.
  • Various forms of intimidation and coercion have been used to target members of the local community that are opposing the project, including physical violence. Gunfire directed at a protest in June 2008 claimed the life of Dula Mandal, a local villager who opposed the project. Local activists have also charged POSCO with unleashing its hired thugs on them. We expect that TIAA-CREF’s stewardship of the academic community’s investments includes attention to such human rights abuses, and a subsequent withdrawal of support from the perpetrators.
  • The non-violent resistance movement on the ground continues despite the many attempts at repressing it. The people have rejected POSCO’s beggarly package which offers them a third of their income of one single year in exchange for permanent displacement from their homes and lands. POSCO has refused to recognize the community’s right to choose against the project -- in so doing, POSCO is acting in contempt of democracy itself. It also appears that POSCO’s human rights abuses in Orissa are part of a larger pattern of unethical practices, as documented by the international environmental organization, EarthRights International in its report about companies involved in oil and gas projects in Burma.

In addition to the above-mentioned economic, environmental and social arguments against the POSCO project, we also note the following letters and statements about the project:

1. Letter addressed to India’s Minister of Environment and Forests by 50 of our colleagues from schools of Business around the world expressing their concerns about the process and terms of the POSCO project;
2. Two letters from Labor alerting the world to problems with the project -- from the United Steel Workers (2008) and workers in South Korea;
3. Public Statements by International human rights and environmental organizations including Amnesty International, Centre for Science and Environment etc.

We write this petition especially in our capacities as professional academics and public intellectuals, and because TIAA-CREF is a huge presence in the management of investments of the academic community. We take TIAA-CREF’s mission and vision seriously and applaud its “long-standing commitment to Socially Responsible Investing (SRI) that is consistent with our nonprofit heritage and unwavering mission to serve those who serve the greater good.” As elaborated above, POSCO is far from being a steward of the environment; local communities in fact stand to be decimated by the project.

We also appreciate TIAA-CREF’s practice of using social screening to “favor[s] corporations that are strong stewards of the environment; serve local communities and society overall…” and find the POSCO project in Orissa to be directly in violation of these social screening standards. We trust TIAA-CREF to invest justly, and do not believe that it should support POSCO through its investments. Therefore, we demand that TIAA-CREF divest from POSCO immediately and publicly, and in full acknowledgement of the fact that support for POSCO directly translates to severe consequences such as loss of life and land, displacement and destitution for the poorest people of Jagatsinghpur and Khandadhar in Orissa.


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