As the world grapples with the pressing issue of climate change, steel companies, responsible for a significant share of global emissions, are under growing pressure to develop and implement sustainability roadmaps.
These plans are critical not only for reducing their environmental impact but also for ensuring their operational viability and competitiveness in a rapidly evolving regulatory and business landscape.
India is the second largest crude steel producer globally, with a capacity of over 138 million tonnes. The sector which is highly capital intensive, has entered into a new development phase, as per capita steel consumption is 69kg as compared to the world average of 214 kg, which foresees tremendous scope for the growth due to comparatively low per capita consumption of steel.
In the past couple of years the sector has witnessed a noticeable slowdown in growth due to the decline in trade and manufacturing activity across most industrial sectors, higher policy uncertainty, tightening of financial conditions and increased trade tensions among major economies of the world.
Despite the challenges, the Indian economy continued to remain the fastest-growing large economy. The overall economic scenario in India will remain under stress relatively in the year 2020 and years to come due to Covid-19 and the socio-economic lockdown and its impact on the local and global economy.
Sustainability & National Steel Policy
Indiaโs Union Cabinet has approved the National Steel Policy (NSP) 2017, with the idea of creating India a globally competitive steel leader. The policy brings significant guidelines towards sustainability aspects for the sector. The policy has a vision to create a technologically advanced and globally competitive steel industry that promotes economic growth.ย
Indiaโs total finished steel production grew by 3.7% YoY to 131.6 million tonnes in 2017-18 and there is ample opportunity for the industry to consistently grow by 6-7% p.a.
The NSP provides a wider scope for sustainable business and also addresses the key issues of sustainability of steel companies, which collectively contribute nearly 2% to India’s GDP.
The National Steel Policy (NSP) aims to transform the steel industry into a globally competitive sector, targeting an increase in per capita steel consumption to 160 Kgs by 2030-31.
It also plans to boost domestic production to meet the entire demand for high-grade automotive steel, electrical steel, special steels and alloys for strategic applications, and reduce import dependence on coking coal from 85% to 65% by 2030-31.
The policy also promotes energy-efficient steel production in an environmentally sustainable manner, striving for global standards in industrial safety and health, and aiming to substantially reduce the industry’s carbon footprint.
Key Issues
a. A high standard of Corporate Governance.
b. A unique product portfolio.
c. Energy efficiency.
d. Ensuring 100% compliances.
e. Production at lowest cost.
f. An optimal and cost effective logistic solution.
g. Raw material security
h. Investment in the human mind.
i. Protection and care of assets.
j. Technology up gradation and adoption.
k. Data analysis and inclusion of Artificial Intelligence (AI)
Identifying risks
Sustainability is fundamental to perform and business operations. Steel companies are required to constantly evaluate sustainability risks that may become greater or others that may emerge. Businesses need to have a robust risk management plan in place to ensure adequate protection roadmap and value enhancement.
Raw material issues
Raw material accounts for 60-70% of the cost of steelmaking. The principal raw materials in steelmaking are iron ore and coal. The raw material is highly regulated across the world. Companies have been challenged in operating their existing mines due to regulatory interventions that caused temporary stoppages at some of their iron ore mines.
Minimizing the resource footprint is also becoming a crucial affair of the steel business. Process efficiency, technology improvements and innovation must address material efficiency during ore extraction and raw material beneficiation as well as at the time of production of finished goods. ย
Companies need to have a Zero Water Discharge plan in place and gradually reduce their water footprint. Steel companies always remember that their businesses have a tremendous adverse impact on the environment.
Corporate Social Responsibility
Steel companies need to view their corporate social responsibility as a routine aspect of their business agenda, rather than just a legal obligation. CSR should be an integral part of the steel business strategy. Making society and the environment better is the collective and shared responsibility and its success depends on collective actions.
The Circular Economy
The Steel sector has to contribute to creating a circular economy by managing waste and e-Waste after the production and use of products. The reuse of waste is an important factor for sustainable steel production. Steel companies need to strive to recycle as much resources and waste generated in the production stage as possible, and to increase the collection and recycling of other wastes after use to create a circular economy.
Sustainability Report
Sustainability carries different meanings to organizations. Steel companies need to publish their Sustainability Reports regularly so that they can measure their year-by-year performance and developments. The principles of balance, comparability, accuracy, timeliness, clarity and reliability are the key subjects that the Sustainability report needs to feature.ย
The following issues also be looked at sustainability point of view at every level:
โข Promotion of ethical behaviour
โข Stakeholder identification and management
โข Resource consumption
โข Emissions
โข Land Acquisition and R&R
โข Community engagement and satisfaction
โข Environment performance management
โข Occupational health & safety
โข Capacity building of employees
โข Local infrastructure development
โข Leadership policy and oversight on sustainability
Caring and investing more in people, the planet, and the process is a key sustainability mantra for steel companies. The Covid-19 regime will be a perfect time to set mid- to long-term goals for sustainability.
Also Read: What Is Responsible Steel Certification?
(Rusen Kumar is the founder and managing editor of Indiaย CSR. He regularly writes on Sustainability andย CSR)
Indiaย CSRย invites Sustainability Leaders to share their thoughts on recent trends in Sustainability.
