Q4 2016 sustainable development leadership review
The final quarter of 2016 brought yet more unexpected change, and at the same time more agreement: the fastest ratification of a UN agreement - on climate change – as well as moves to protect the steel industry against unfair trade in a number of countries. Against this backdrop, we have seen strong contributions to the long-term success of our business and to sustainable development.
We significantly strengthened our balance sheet in 2016, ending the year with the lowest level of net debt since the creation of the company. This will not only better equip us to weather any economic challenges we may face, but it will also enable us to invest in the future. And in the last quarter of 2016, we further embedded our 10 sustainable development outcomes into the day-to-day running of our business. Nominated sponsors for each outcome facilitated assessments of our operations and this has given us the learning to develop plans to tackle the challenges and drive forward progress.
The two areas I’d like to note in particular, on carbon and the circular economy, and on sustainability standards, indicate that we are demonstrably supporting Sustainable Development Goal 12 to ensure sustainable production and consumption patterns - throughout our value chain.
Contributing responsibly to a low-carbon circular economy
With the Paris Agreement coming into force on 4 November 2016, cementing the ambitious target to limit the global temperature rise to 1.5C compared with pre-industrial times, ArcelorMittal remains committed to being a responsible contributor to a low carbon future. This starts with reducing our own carbon emissions per tonne of steel by 8% of 2007 levels by 2020.
To go further, we will need to make low-carbon steelmaking a reality. To this end, at COP22 in Marrakech I took part in the launch of a new collaboration between ArcelorMittal, cement maker LafargeHolcim and chemicals companies Evonik and Solvay. This will explore how we can work together to substantially reduce CO2 emissions across these carbon-intensive industries by converting them into useful products such as transportable energy, chemicals or plastics. On a similar theme, our partnership with LanzaTech to turn our waste gas emissions into fuel overcame some regulatory hurdles at the end of the year and will start to build a demonstration plant in Ghent in 2017. Commitments like this led us to rank first for low-carbon technology development in the Climate Disclosure Project’s steel sector report, Nerves of Steel, published in October. We ranked fifth overall out of 14 steel companies, and second for emissions and energy management.
It’s clear that we’re embracing the enormous challenge of decarbonising steel, an inherently carbon-based product, but to make a success of it we need support from policy makers. So at Marrakesh and elsewhere we have found ourselves in the uncomfortable position of highlighting the shortcomings of European carbon policy as it stands. We need policymakers to help us help them because as global citizens, we want the ETS to work to reduce emissions globally. It’s in no one’s best interest to see steel production and its emissions simply emitted elsewhere. The aim of the system should be not just be to reduce emissions from what Europe produces, but also to reduce emissions from what Europe consumes. The answer our chairman and CEO has proposed is the introduction of border carbon adjustments to increase the cost competitiveness of lower-carbon steel.
Designing sustainability-driven innovation
In an example of how the 10 outcomes are driving change within our business, in November Greg Ludkowsky announced Global R&D’s new Sustainable Innovation tool, which will ensure all future R&D projects are designed with sustainable development in mind, and so be in a position to help our customers identify the sustainability benefits of the new innovations we offer them.
Throughout the quarter, we continued to work towards becoming a trusted user of air, land and water, upgrading our plants to ensure they meet the environmental standards our stakeholders expect. Our colleagues in Poland finished a project to improve emissions from our coke plant in Zdzieszowidce, and received the go-ahead for the last of four de-dusting projects for the Dabrowa Gornicza steel plant. Both here and in Bosnia & Herzegovina, our colleagues plan to pilot an innovative hybrid filtration technology that will make our air emissions cleaner than ever. All this is part of a major modernisation programme that will see $167 million in environmental improvements by 2018.
Responsible production – a sustainable development goal
When it comes to what we offer our customers, ArcelorMittal is doing more than talking about sustainability. We’re working to demonstrate sustainability standards in our steel operations and raw materials supply chains by taking an active role to develop these new standards for the industry – ResponsibleSteel™ and the Initiative for Responsible Mining Assurance.
Countless conversations with customers, suppliers and civil society organisations this quarter paved the way for us to present an outline of the ResponsibleSteel™ standard in January 2017, and invite stakeholders to join a working group to drive a multi-stakeholder approach to evaluating the sustainability of steel. The aspiration is to protect not only the environment, but also the human rights of those working in, or living near, mines and steelworks. Successfully implementing the standard and having our sites assessed against it will reassure our customers that we should be their preferred choice, and bolster our role as a leading responsible corporate citizen.
Dr Alan Knight
General manager, head of corporate responsibility and sustainable development