We have been part of the South African economy for over 85 years. In May 2014, our South African business published a study that for the first time set out to quantify our economic, social and environmental impacts, both positive and negative. The key objective of the ‘Factor Assessment’ was to develop a methodology to measure these impacts, which would produce clear and practical action plans, and measurement criteria.
The methodology was underpinned by a four-step framework which was developed by the World Business Council for Sustainable Development. These steps were as follows:
- Set boundaries. This involves defining the objectives and geographical scope of the study.
- Measure direct and indirect impacts. This includes defining the relevant indicators for all levels of impact.
- Engage with stakeholders. This includes assessing what is important to stakeholders, and coming to a joint understanding of what the business should be contributing.
- Prioritising action. This includes establishing action plans, and the indicators that will best measure progress.
The report identified six areas where our key areas of influence in South Africa lie:
- as an engine of economic growth: as the leading steel producer in South Africa, we form a structural component of the national economy through our employment, procurement and taxes. Our direct and indirect contribution to the South African economy in 2013 amounted to 1.3% of GDP.
- as an employer, job creator, and skills developer: in 2013 we employed 9,000 people directly and over 14,900 people including indirect employees. We provide training and development for our own employees as well as technical training for engineers, investing nearly $13 million in 2013 and providing 120,000 training seats.
- through our impact on local communities: we spend 24% of our procurement budget on local suppliers. This is generally positive, but not always: the transportation of raw materials and finished goods on the roads can increase accidents, congestion and environmental and noise pollution. We try to mitigate these issues by transporting 62% of our material by rail. We also engage actively with community initiatives.
- through our environmental footprint: the report found that we are one of South Africa’s largest consumers of key resources such as water, energy and raw materials. Since 2005, we have reduced the water used for steel-making by 48%, and our abstraction rate is now below the average for global steel companies. The report also analysed emissions such as CO2, SO2 and particulates, and the amount of by-products we send to landfill, currently 39%.
- by supplying steel for South Africa’s development: South Africa’s National Development Plan aims to increase capital expenditure to 30% of GDP by 2030, and steel can play a major role in this. ArcelorMittal currently provides 57% of domestic steel.
- as a catalyst for change in South Africa: we are leading the way in areas such as health & safety, and health initiatives to ensure employee well-being. We have robust anti-corruption procedures which are regularly audited, and comprehensive employment policies covering equality, representation, transparency and following due process. We are actively involved in national debates and forums.
The methodology used for the report is a clear way to measure progress in both the short and long term, in assessing environmental, social and economic value. It gives an accurate and balanced view of our footprint in South Africa, praising the positive, and identifies priority areas for improvement.
The value of such a study has been particularly clear to see in South Africa, given the importance of Broad-Based Black Economic Empowerment (B-BBEE). Our Factor Assessment study and the subsequent 2014 update have been important not only to share in our 2014 South Africa sustainability report but to inform our strategy to improve our B-BBEE rating by focusing more on local employment, enterprise and skills, procurement and social development.