All quarterly reviews

SD leadership review - Q3 2016

Dear stakeholders,

Last quarter brought a momentous milestone for ArcelorMittal – the 10th anniversary of the merger between Arcelor and Mittal Steel. This occasion gave us reason to celebrate our achievements and the value we have created since 2006, including a $700 billion1 contribution to the global economy and a reduction in our lost time injury frequency rate from 3.1 to 0.8.

The anniversary also provided us with the opportunity to pause and reflect on the future trends and dynamics that will shape our business over the next ten years and beyond.

Embedding consideration of social and environmental trends into the way we approach our business is increasingly something our stakeholders expect.  Our first step towards integrated reporting earlier this year has received a lot of recognition, including from Ethical Corporation, from whom we received their ‘X factor’ reporting award.  We’ve won prizes in our sector before, but this recognition, alongside our nomination by the Investor Relations Society for excellence in integrated sustainability communications, demonstrates that our efforts are being recognised in a much broader context, and that we're on the right track.

Now I want to talk about other progress in sustainable development (SD). 

Driving sustainability throughout the value chain
The past quarter has seen more and more interest among our customers in sustainability standards in the value chain, particularly those in the European automotive industry, but this is echoed in packaging, household appliances and construction. Our customers tell us they support our role on the boards of Responsible Steel (RS) and the Initiative for Responsible Mining Assurance (IRMA), two certification standards that are under development. We’re pleased these are moving forward, and the next stage is to run pilots in 2017. 

Having responsible supply chains is important, but that is only half the story. The innovative steels we produce make an important contribution too. We have invested over US$2.5 billion into R&D over the past 10 years, facilitating the creation of more than 250 new types of steel. Today, a substantial focus of our R&D programme is on improving the contribution of our steel products to sustainable development, and we have developed a tool to assess this.

We’re also working with our suppliers to encourage their innovative contributions to sustainable development.  Congratulations go to PPG, BASF and Valspar, who were recognised in our recent Paint Supplier Innovation Awards organised by our Global R&D colleagues.  It’s an example of how we’ve been cultivating collaborative relationships, in this case to develop the environmental credentials of our organic-coated steels used in building facades.

The biggest conversation around innovation at the moment seems to be about the circular economy - another example of an opportunity for us created by environmental trends. We’ve been collaborating with Arup to demonstrate a circular economy building design in a prototype displayed at the London Design Festival in September, which was specifically designed to be entirely reused, remanufactured or recycled.

Driving sustainability throughout our operations
I am delighted how well our 10 sustainable development outcomes have been received.  All but two of our countries now use these 10 outcomes to structure their SD reports. Drawing on the expertise of colleagues from across the business and our sponsors for each outcome, we launched an improved assessment process of our operations against the 10 outcomes in Q3 to see where our greatest risks lie and where we are showing leadership. As third party certification standards emerge for our sector, as we expect them to, and as RS and IRMA are formalised, we will align our own assessments with these. 

The richness of our leading SD programmes that are creating value both for ArcelorMittal and for our stakeholders makes me very proud.  Here are some highlights from around the world this quarter:

-  ArcelorMittal Brazil was recognised with a judiciary merit award for its contribution to social outreach initiatives (outcome 8)
-  ArcelorMittal Dofasco was recognised as a top employer in North America with an Achievers 50 Most Engaged Workplaces™ award, based on communication, leadership, culture, rewards and recognition, professional and personal growth, accountability and performance, vision and values and corporate social responsibility (outcome 1)
-  ArcelorMittal Mexico was presented with two awards by the Mexican Centre for Philanthropy (Cemefi) in recognition of our community capacity building project “Cultivando Futuros”  or Cultivating Futures (outcome 8), and our contribution to environmental protection through our “Turtle Camp” initiative (outcome 5 and 8).

Awards such as these are the result of many years of hard work and effort; our teams in Brazil, Canada and Mexico deserve great credit for their accomplishments.

Developing talent for tomorrow
SD Outcome 9 is all about ensuring we have a talented pipeline of scientists and engineers for tomorrow, and our community investment programmes continue to focus on this area, with 40% of spend going on STEM related activity. To support this outcome, ArcelorMittal France last year launched the Prix des Innovateurs, aimed at individuals or groups of young entrepreneurs under the age of 30; the focus in the first year was on energy storage and big data. My congratulations go to the six winners, announced at an award ceremony in Paris in July, and also to our team in France for launching and delivering this exciting new initiative.

Health and safety, always our key responsibility 
Whilst I have focused on the future I would like to close by acknowledging the progress over the last ten years on one issue which goes to the core of our business that is health and safety. Despite a 75% improvement in our lost time injury frequency rate (LTIFR) over the past ten years, our Q3 results showed that the improvements have plateaued. Our LTIFR rose to 0.84 in Q3 2016 compared to 0.79 for Q2 2016, and 0.78 for Q3 2015. Overall, the lost time injury rate to date this year was stable compared with last year, at 0.80. But our focus is resolute; we are working continuously to instill cultural change through a number of programmes that will take our performance to the next level. Sadly just after we published our Q3 results, four colleagues tragically lost their lives in our coal mine in Kazakhstan. Our hearts go out to their families and colleagues. 

Dr. Alan Knight

Dr Alan Knight
General Manager, Corporate responsibility and sustainable development

1 For nine years from 2007 - 2015