To start, can you give us a quick recap of what is green or “near-zero” steel as ResponsibleSteel would define it?
When we talk about green steel, it often confuses more than it clarifies, because we immediately think, “Well, what is green? And what shade of green are we talking about? Are we talking about carbon emissions or other environmental and social impacts too?”
The steel industry, after all, has had quite a history of pollution and safety challenges. It’s also generated thousands of jobs and these will change with steel’s decarbonization. And not just in the steel making process, but also in the extraction of raw materials. So, when it comes to what is ‘green steel’, it’s not entirely clear.
At ResponsibleSteel, we provide a very precise definition. If you’re certified against the ResponsibleSteel International Standard, it means you’ve complied with 13 different principles of environmental, social, and governance. It includes specific greenhouse gas accounting rules and sourcing requirements for input materials.
To aim for ResponsibleSteel certification is an important commitment. There are five different levels to achieve, which reflect your level of progress towards making ‘responsible steel’.
We’re seeing a lot of effort aimed at decarbonizing the metals and mining industry globally. Are there leaders that stand out in this?
There are a lot of standout efforts going on across the world, but in terms of achieving consistently measured progress towards near-zero steel, we haven’t yet got physical production of this, not at scale.
There’s an encouraging trend towards renewable electricity and some plans for green hydrogen in many parts of the world, along with the potential in carbon capture and storage (CCS). But when you talk about real progress that’s been made today, you’ll find the lowest emission steelmakers are those that have very high levels of energy efficiency and have been experimenting with some of these new technologies already.
They may have been trialling the capture of the process gases, then processing them for storage or for conversion into products such as plastics. There has been a lot of work already in Europe, in China, and in India on those fronts.
On green hydrogen, we can see momentum now with the Inflation Reduction Act (IRA) and other legislation in the US. In Europe, we have seen a slightly different approach. Rather than incentivizing change, the Emissions Trading System (ETS) was aimed at making it more expensive to produce in a way that’s not green. Now there are several European member states that have agreed to contribute financially to the decarbonization of capital assets in steelmaking plants, to assist with the cost burden of change.
A lot of the discussion around decarbonizing can often happen at the processing end, but what about the upstream? Is this drive for steel decarbonization really happening at the mine site or is it across the supply chain?
Traditionally, we think of the steel value chain as the mining company that extracts the iron ore and coal, which sells to the company that makes the steel. The future value chain is going to look a little different. We’re going to have the iron maker as well as the steel maker. So, you’ll be looking not only at the extraction of iron ore, but (in the future) the production of green hydrogen, green electricity, and green iron, all as elements of the upstream.
Despite this activity, there’s not enough momentum today on the sustainability standards for the upstream. There are standards that exist for mining companies, but there’s very little uptake.
I think we’re seeing two things. One, we’re not seeing enough demand flow through the value chain from the end user, the automotive company, the wind turbine manufacturer, upstream, back through to the mining company to say, “We want you to achieve the highest standards”. And we’re not seeing enough data sharing along the value chain to evidence where the good practice is happening.
Five years ago, no steel maker was sharing their CO2 emissions data. That’s changed and it’s still changing. We need to see the same change happen in the value chain in terms of responsible sourcing. We’ve got the EU Due Diligence Act. Most companies have responsible sourcing policies, but when you want to find out your risk, that is, to map your risk in your supply chain, you need to know what mine it’s coming from, and that information is not passed along the value chain.
So, we need to build the confidence of the players in the value chain and create systems which enable that data sharing, and ResponsibleSteel is doing that.
We need standards to be interoperable so that they can work together in a way that’s effective to bring down the emissions of the entire industry
It’s interesting you bring up this idea of players across the value chain requesting this information. Do you think that’s going to trickle up even more to consumers asking for those kinds of sustainability standards down the line?
I wish I had a crystal ball! Steelmakers traditionally are not exposed to the end consumer. They supply to the automotive maker, and to the white goods manufacturer, but they’re not exposed to the end consumers. So that’s not happening now.
I think with the growing trends on sustainability, the clearer we can get around definitions and claims about responsible steel, the more it’s likely to happen. Because one thing that happens when you involve the customer is the high risk of greenwashing. Automakers for example must be really specific about what claims they are making about the ‘sustainability’ of their vehicles. Are they really green? No, but if they are making progress, that needs to be backed up with independent certification, and ResponsibleSteel offers just that.
With this growing discourse around ESG and sustainability issues, how can end users understand what that difference is between greenwashing and what actually makes a difference?
The end users need to be able to trust the claims and the standard which underpin that claim.
When you look across the market, whether it’s Marine Stewardship Council marks in a supermarket or FSC marks on kitchen roll, there is a whole system of certification and chain of custody rules to enable those claims to be made. That’s what we need in steel. We need it between traders as much as with the end customer.
At the moment, we have two different systems. We have demands from our members from the customer end for physical green steel, which is physically lower emission steel and will in time be actual near-zero emission steel.
We also have a whole host of initiatives which are making claims on virtual green steel, via virtual carbon saving certificates example. Those are more confusing to the consumer. The less obvious it is, the less physical, the harder it is to be believable.
ResponsibleSteel has listened to our members and decided in the first instance to certify physical steel. This is steel that you can trace all the way along the value chain and know that the emissions have been reduced in its production, and that reflects real progress, because the certificate is carried through the value chain with the physical steel using a set of rules known as chain of custody. So, when you buy the end product, you know it’s made with steel that actually came from a steel plant that’s making progress on its emissions, and ultimately from a responsible supply chain.
These are all things the end customer actually cares about. Climate change is the most obvious one, of course. But, they’re also concerned about whether there’s child labour in the mine or in the freight industry which brings the iron ore to the steelmaking site, and the impact of pollution on people living near the site. So these things often go hand in hand for the end customer. And instincts about greenwashing can apply to any of these aspects.
What exactly is ResponsibleSteel’s mandate? What are you hoping to achieve over the next few years?
ResponsibleSteel was set up initially with a mandate of maximizing steel’s contribution to a sustainable future. That recognizes the enormous role that steel plays in building a sustainable economy.
Whether it’s the wind turbines, the solar panels, or the EVs that we have; or whether it’s the hydrogen electrolyzers that are being built for the future, those all need to be made from steel. So that’s inherently recognized in our mission, but at the same time, we must build this new world with responsible steel.
We do three things as an organization. We build a multi-stakeholder forum; which enables steelmakers, NGOs, mining companies, and automotive companies to sit together and really drill down and try and constructively work out solutions.
And the solution, in terms of our mandate, is to create an International Standard, which we published in 2019. And that standard needs to evolve. Take decarbonization, for example. Last year, we published four levels of progress on decarbonization and responsible sourcing for sites to achieve in their certification.
The third element is our assurance programme, which is essentially a third-party certification system, that enables the customer buying certified steel to be reassured that what they’re buying is actually what it says on the label.
ResponsibleSteel has a strategy, Momentum 2025, which is, I would say, absolutely vital for us to really deliver mainstream impact at scale.
We are building momentum by scaling up the demand for responsible steel, scaling up our assurance programme to deliver certifications, and ensuring that our standard is fit for purpose every step of the way. We are also working with a large number of partners to inspire and shape the future of standards.
We need standards to be interoperable so that they can work together in a way that’s effective to bring down the emissions of the entire industry.
For example, our ‘decarbonization progress’ certification scheme is based on the fact that scrap is a finite resource and so it’s not about the amount of scrap you use but the structural changes you make at your site to reduce carbon. Depending on where you are in the world, you may have access to a lot of scrap or very little scrap. The ResponsibleSteel system qualifies sites that are making real progress to near zero. Only by doing that are we going to drive the whole of the industry down.
Now, at the same time, the customer wants to buy the product with the lowest emissions footprint. So we must marry those two metrics to really drive change. One is the ResponsibleSteel thresholds that reflect your progress towards near zero, and the other is the carbon footprint of the product itself. Our Standard combines both of those and says, it’s not one or the other, you need both.
Whilst national policy makers are thinking about how to incentivize change among steelmakers in their markets, we are saying, focus on the product carbon footprint, that’s extremely valuable data, but you must also ensure that you are rewarding progress on a common scale. And don’t forget human rights too.
The First Movers Coalition recently made this clear when they launched the Near Zero Steel 2030 Challenge in New York. To demonstrate the intent to produce near zero steel in a way that’s comparable across companies, Challenge contenders will need to show they can achieve near zero by undergoing an assessment against ResponsibleSteel’s near zero thresholds.
ResponsibleSteel has also been working with other international bodies this year to create a framework for alignment of standards, based on some very intuitive principles. You’ll be seeing an exciting new announcement from a lot of international organizations that are going to be signing up to these principles. This is a crucial foundation in a world where new standards are emerging without such good practice.
We need to be developing standards in a way that is inclusive, that listens to voices from across the world, not just mature economies. We need to be doing it in a way that’s transparent. We need to be ensuring that it doesn’t discriminate against countries with different resource bases.
ResponsibleSteel has been doing just this and will soon consult on revisions to our progress thresholds that takes on board not only the evidence we’ve found from good steelmaker data, but also the feedback we’ve had from stakeholders.
Then in the new year we’ll be asking stakeholders about the rules we need to assure a chain of custody through the value chain for responsible steel. This is what ultimately will enable an automotive company, for example, to credibly say that its cars are made with steel certified to the ResponsibleSteel international standard.
With steelmakers joining us from India, the Middle East and Europe this year, we are seeing a large and growing pipeline of demand for RespnsibleSteel certification audits in all parts of the world. These are the sites that are thinking not just about carbon emissions but about people, air quality and mining standards. If they are successful, we could be seeing some 215Mt of production capacity coming under our core certification by the end of next year, all of it in a great position to show their progress steps towards near zero.
