Safety and our sustainability credentials
It is also important to have strong safety and sustainability credentials. We are living in an environment not only of economic volatility but also social and environmental change. The global population is expected to grow by a further one billion by 2025. More and more people are moving to cities in an expectation of more opportunities and a better quality of life. And as emerging markets continue to grow increasing investment in infrastructure will become essential. At the same time 2015 marked the important COP21 meeting in Paris that was broadly regarded as a success and marked a new global commitment to transitioning to a lower carbon economy, even if the path may not be entirely clear or straightforward. These trends throw up complex new challenges. Growth is positive but will result in increasing carbon emissions at a time of political determination to achieve the opposite. A billion more people on the planet will put increased pressure on natural resources such as water and the need to manage them wisely. These trends will not disappear, and the impact businesses have on such matters will come under enhanced scrutiny. Companies that are well prepared for these changes will have a strong competitive advantage. At ArcelorMittal we can see the increasing importance our customers and other stakeholders are putting on sustainability issues. It is important that we can convincingly demonstrate to these stakeholders that these issues matter for us as well and that they are integrated into the way we do business.
Safety has been our first priority since the creation of ArcelorMittal and remains an ever present challenge and a critical area of focus. Our lost time injury frequency rate improved to 0.81, from 0.85 in 2014. This is an encouraging result, although we clearly have more work to do in order to reach our target of zero injuries and fatalities. It is a daily challenge and relies on rigorously ensuring a safety focussed culture is implemented everywhere we operate and not only within our own employee base, but also with our contractors.
Safe healthy quality working lives for our people is the first of our ten sustainable development outcomes that are designed to ensure we are preparing and adapting to social and environmental trends more broadly. The outcomes are listed in full in the sustainable development section of this report. Of course some outcomes are more easily achievable than others. For example we have a strong position when it comes to the development of products that promote the sustainability agenda. Our high strength steels for the automotive sector are the most obvious example, but we are also developing innovative and transformational products for the white goods, construction and alternative energy industries. Our R&D team is continually pushing the boundaries of what steel can achieve. We are also showing leadership when it comes to supply chain transparency, signing up as a founder member of the new Responsible Steel Initiative designed to develop sustainability standards in the supply chain. The discussions are still in their infancy but we are pleased to be a leading contributor to the debate.
It is fair to say that when it comes to reducing our carbon footprint we have a tougher challenge. The chemical process for making steel requires using carbon to extract oxygen from iron-ore – therefore it should not be surprising we are a significant emitter of CO2. We are transparent about this as is reflected by our 99C ranking in the 2015 carbon disclosure project. The steel industry has done a lot to reduce emissions over the years; but we are coming close to what is technically possible. Steel is the most used material in the world on account of its longevity, versatility, flexibility and affordability; therefore it is unrealistic to think that it can be replaced in significant volumes by other materials. It also benefits from being infinitely recyclable and is therefore a genuine contributor to a circular economy (the concept of extracting maximum value from materials whilst in use, then recovering and regenerating them at the end of their useful lifecycle); important factors we believe should also be taken into account in legislation. Current systems that are on the surface designed to incentivise emissions reduction will not achieve their aim due to the global nature of the steel-making industry. Therefore we believe an approach is required that takes into account both the global nature and chemical process of steel-making and offers a real platform from which to incentivise new and potentially transformational technologies based on a fair and level-playing field.
Outlook and priorities for 2016
Of course sustainability starts with profitability and that is why delivering successfully on Action 2020 is so important to us. We must have a strong level of profitability in order to be able to invest adequately in areas such as R&D, environmental improvements and energy efficiency that will boost our long-term sustainability credentials.