Having launched our 10 SD outcomes in April, we talked to external stakeholders about the value of this long-term approach, and found widespread support for it.
We were very pleased to receive the Steelie award for excellence in sustainability 2015 from the World Steel Association, in recognition of all the work we’ve done to develop our 10 outcomes, and the thinking and collaboration that went into them.
Developments in 2015 reminded us of the value of getting our stakeholder relationships right. Discussions with a number of key customers on aspects of our supply chain – tin from Indonesia, coking coal from Mozambique, and iron ore from Brazil – demonstrated the value of transparency in building trust. They also led us to understand just how our customers’ expectations are likely to develop in the coming years. This is why, under outcome 7, we are looking into building a common sustainability standard for steel, and so a supply chain that our customers trust. Partnerships with our customers also yielded some clear recognition for our contributions to sustainability, such as an award from PSA Citroën for developments in our Fortiform® range of steels.
The climate change convention in Paris towards the end of 2015 helped us shift our focus from policies that just look at the CO2 emissions of steel production, to the broader contribution steel is making to a lower-carbon future. We need to recognise how our products reduce the emissions of our customers, such as in the automotive industry, and that steel can be endlessly recycled in a low-carbon way.
Yet ArcelorMittal has a significant carbon footprint, because CO2 is not simply a by-product of energy use as it is in other industries. It also comes from the use of coke in the chemical process of making steel – you can’t make primary steel without it.
So, reducing our carbon footprint presents a real technical challenge. In July, we announced a partnership with LanzaTech and Primetals Technologies to explore the conversion of our waste gases into fuel. We haven’t yet made the breakthrough that will stop us being a carbon-intensive industry, but the LanzaTech partnership demonstrates that this is something we want to do.
In 2015, we began work on a broader roadmap for how we can contribute to a low-carbon future. This will map the potential for CO2 reductions through both continuous improvements in energy efficiency and new technologies, the contribution of our products and our by-products, even our waste gases and the energy we generate for local communities around our plants.
As part of this roadmap, we aim to work with policymakers to find mechanisms that could help the entire steel industry develop viable carbon-reduction technologies. We have some concerns that localised emissions trading schemes, for example in Europe, will only displace steel production from the affected market to other parts of world where there is no price on carbon. However, we believe that with the right policies and incentives, steel can and will make a significant contribution to creating a low carbon economy.
Last year we continued to make important achievements in both energy efficiency and air emissions. For example, in 2015 we saw the completion of no less than 13 environmental investment projects at our plant in Ostrava, Czech Republic designed to reduce our air emissions. But these improvements have yet to have an impact on our environmental performance, which in 2015 showed slight deterioration in a number of areas. The major factor influencing this was market demand: due to the slowdown in the construction industry, we produced relatively less long steel products from our electric arc furnaces and more from our blast furnaces. In blast furnaces, emissions are generally higher because more primary materials are used. And yet this is where we are producing the specialised steel society is demanding – as well as the by-products and the energy exports that benefit other stakeholders, as explained in this report.
Despite difficult economic conditions, we allocated $176 million to environmental and energy investments over the year – but just as important was our work to strengthen stakeholder relations to become a trusted user of air, land and water under outcome 5, for example in Ukraine, Liberia and the USA.
The rupture of another mining company’s dam in Brazil showed how damaging environmental pollution can be when things go wrong. And, since that company was one of our suppliers, it showed us how important it is to manage our supply chain proactively. It also reinforced the value of the work we were already doing to carry out structural assessments and improvements to dams at our own mining sites.
It was a huge relief to all of us at ArcelorMittal to see a cessation in new cases of Ebola in West Africa. Following the work we did in founding and supporting the Ebola private sector mobilisation group (EPSMG), we were able to share what we’ve learned about partnership and the role of the private sector in combatting society’s issues at a number of important conferences and think tanks. We were immensely proud to receive a Clinton Global Citizen Award for this work, in September 2015. This type of approach will be key in tackling the UN Sustainable Development Goals and it’s already proving valuable in the face of other challenges such as the Zika virus in Brazil. One of the biggest learnings from Ebola was the need for flexibility: the EPSMG was extremely effective, but it was never a formalised structure, rather an alliance of organisations who worked together in the best way to address whatever problems arose.
Embedding the 10 outcomes
Looking inside the business, we made some good progress on embedding our 10 SD outcomes across ArcelorMittal. Our SD team had many detailed discussions with business leaders across the Group, based on performance ‘dashboards’ which set out the issues and progress in each market.
We now have senior corporate sponsors for each outcome, who encourage collaboration across the business, and convene key people to develop our thinking on each issue. And for each outcome, we are developing more in-depth explanations of how we can achieve each outcome, and part of that will be how to measure success.
Strengthening our sustainability reporting
As we begin to appreciate how the 10 outcomes are adding value to our business, so we are beginning our journey towards integrated reporting. This year, we have taken our first step, by enabling our stakeholders to access our reporting on the 10 outcomes from within this Annual Review both at a group level, in the 10 outcome sections here, and in our reporting on each of our segments. At the same time, we have created a continuous reporting hub on the sustainability pages of our website to enable people to follow events throughout the year, not only with items of news and blogs relating to sustainable development, but also a quarterly message from our leadership.
At the same time, we’ve developed a roadmap for our local sustainability reporting, with guidance and templates for the 20 countries that produce local reports. This will help us report consistently and effectively against the 10 outcomes to local stakeholders in every country where we have major operations – a key part of our commitment to meaningful transparency. Increasingly the content of these reports will feature on the sustainability pages of our website.
If we manage these challenges well, we can open up new commercial opportunities, be competitive, build trust, and pre-empt potential problems. But if we don’t, we face the risk of business disruptions, a damaged reputation, and erosion of our licence to operate. That’s why we have to get on the front foot.
In 2016 we will be integrating sustainability more deeply into the business, and embedding the 10 outcomes into every unit’s thinking and business planning. We will look at the kind of targets we need to set to achieve our outcomes, and how to measure the contributions we make to society in the process. We want to end the coming year with a much clearer view of how the outcomes align with our corporate strategy, and we want to be taking a leadership stance on the sustainability agenda for business.