We’re shaping  a more responsible steel industry.

As we move toward September, we’re gearing up for an exciting period at ResponsibleSteel. We’re happy to announce our participation in the upcoming India Net-Zero Steel event hosted by SteelZero and later in the month we have a major announcement planned for Climate Week NYC. We hope to see you there. If you’ll be in Mumbai or New York to attend these events and would like to organise a meeting, please get in touch!

In this month's newsletter, you will find key updates including:

• Our newest member
• Upcoming events and webinars
• And more from the team and our partners!

Click here to view ResponsibleSteel's August 2024 newsletter.

By Dave Knight, Convenor, the Roundtable for the Responsible Recycling of Metals

Recycling delivers key socio-economic and environmental benefits but unknown to most are the risks involved when it is not done responsibly.

The Roundtable for the Responsible Recycling of Metals (RRRM), a multi-stakeholder, multi-metal initiative, was set up to support the development of responsible scrap sourcing standards, systems, and tools. For the last 18 months, RRRM overseen by a Steering Group of which ResponsibleSteel is a member, has collaborated with stakeholders across the metals sector to understand and make recommendations to improve ESG management and performance. This process involved running working groups, conducting extensive research, and mapping existing voluntary standards, legislation and industry guidance on metals recycling.

In May, RRRM launched its findings, demonstrating that current approaches are insufficient to ensure recycled metals do not harm people or the environment. The roundtable also published its recommendations and ResponsibleSteel plans to incorporate these into the review of the ResponsibleSteel International Production Standard in 2025.

Steel recycling

Steel has one of the highest recycling rates in the metals industry. Approximately 650 million tonnes of steel scrap feed about 30% of global steel production.

Carbon emissions from secondary steel production using scrap are less than a third of those from primary steel production, which is why companies are increasingly investing in secondary production as part of their decarbonisation strategies. But there are limits to scrap availability. We need to ensure that the scrap available is being responsibly sourced and isn't being displaced to meet the decarbonisation needs of one producer to the detriment of others.

Findings and recommendations

Widely used OECD ‘Due Diligence’ guidance relies on traceability and risk assessment. But traceability in diverse and distributed value chains can be extremely challenging due to the number of actors in the collection and pre-processing sectors. Reaching informal and subsistence collectors and recyclers, where some of the highest risks exist, is particularly hard and traders can be reluctant to disclose sources to maintain commercial interests.

For example, there are hundreds of thousands of people, mainly women and vulnerable groups, working at a subsistence level in the hinterlands of ship recycling facilities, notably in India, Bangladesh and Pakistan. Knowledge of these groups is poor and often overlooked in the downstream value chain. For more distributed post-consumer sources, like white goods or steel within electronics, the International Labour Organisation estimates that approximately 20 million informal workers work as waste collectors and sorters, often in poor conditions. Guidance on labour and human rights needs to be improved and post- and pre-consumer recycled content should be further broken down to help inform scrap sourcing risk profiles.

Improving assurance

The inclusion of recycled metal value chains in assurance processes is the starting point and metal producers should expect increasing focus on the ESG management and performance of these inputs. Legislation and voluntary approaches should be enhanced to include requirements relating to ‘untraceable’ parts of supply chains, recognising the high numbers of smaller-scale formal, informal, and subsistence recyclers. Worker and community engagement and grievance mechanisms, app-based accessible reporting, site sampling in third-party audits, commissioned research and independent surveying of high-risk locations can also be considered.

Policy and market opportunities

Extending producer responsibility legislation across nations would better reach high-risk parts of diverse supply chains. Market platforms and exchanges can strengthen ESG disclosure requirements and differentiate products which demonstrate higher ESG performance.

Furthermore, not all recycling of metals is economic and losses of materials lead to higher ESG risks. For example, the shipbreaking and steel working group found that shipowners get better prices for end-of-life (EOL) vessels broken in poorer conditions. The last beneficial shipowners have a key role to play in recognising this and metal producers should understand the risks associated with these inputs.

Metal Producers and recyclers

Recyclers should work to improve collection, segregation and sorting practices and the development and transfer of recycling technologies to higher-risk locations. This would help reduce contamination and exposure to hazardous materials as well as help maintain the alloy or grade quality maximising profitability. Producers and recyclers should also collaborate with brands and manufacturers to optimise efficiency and reduce ESG risks across the value chain considering new business models such as metals leasing and service delivery.

Labour, human rights and biodiversity risks are less well covered by industry requirements, guidance and common practice. Third-party audits will place more emphasis on recyclates, on analysing sources from an ESG perspective and will expect metal producers to be able to clearly communicate the boundaries of traceability.

Brands and manufacturers

As responsible sourcing becomes more sophisticated, brands and manufacturers should invest in improved performance at higher-risk locations that represent the ‘untraceable’ part of their supply chains. ‘Book and claim’ systems enable appropriate responsible sourcing claims to be made and can support action in areas which are currently overlooked. Brands and manufacturers should also publish data to better educate consumers, build opportunities for products with higher ESG performance, and improve the transparency of secondary scrap supply chains.

Further information and next steps

ResponsibleSteel recently ran a webinar on the outcomes of the Roundtable, the slides of which can be accessed here. A summary report, a 1-page route map, a risk profile, and three background reports with detailed findings and recommendations are all available on RRRM's website.

Parties interested in collaborating to take forward some of these recommendations should contact Dave Knight.

Images: Shutterstock

Note: This opinion piece was originally published in Business Green.

As the world warms, the search is hotting up for a 'green transition' - shifting the building blocks of the economy onto a sustainable footing. There are many uncertainties around how - and how fast - we can make this happen, but one thing is certain: steel will be at its heart. Whether it is wind turbines or electric cars, buses, trains or bicycles, steel has to be part of the solution.

At present, though, it is also part of the problem. Because much of current steel production is highly polluting, dependent on massive blast furnaces which produce the metal by smelting iron ore with heat generated from burning coal. The sector accounts for around a quarter of all industrial emissions globally; if steel were a country, it would be the fourth biggest emitter on the planet.

Change has to happen - and fast. The International Energy Agency (IEA) has warned the sector as a whole has to cut emissions by 90 per cent by 2050 to keep it in line with global climate goals as set out in the Paris Agreement. Now, a new report from ResponsibleSteel has detailed the speed and scale of the shifts required in the coming years. According to its analysis, every steel plant in the world needs to be emitting less than today's average emissions intensity by 2030. In other words, today's average emitters will become the industry's worst offenders by 2030 - if they do not take steps now to improve.

In this year of elections, it is clear that governments on both sides of the Atlantic are keen to support their domestic steel industries, but also demonstrate they are making progress on the climate front. Meanwhile, major procurers looking to decarbonise their supply chain want action, too. So the search is on for steel which doesn't cause unacceptable environmental impacts.

There is one beguilingly simple answer: make new steel from scrap. This can result in emissions savings of around two-thirds compared to so-called virgin steel. It is also around half the price. Small wonder then that steel producers with access to scrap - or with the purchasing power to gain it - are racing to meet demand.

But as a long-term solution, this leaves much to be desired. For one thing, there simply isn't enough recyclable steel around to meet demand. And the race for scrap risks leaving longer-term solutions, such as systems that use 'green' hydrogen, starved of the investment they need to go to scale.

Any meaningful strategy to decarbonise the sector must combine using all the scrap that is available, with some serious drivers that ensure innovation in primary steel production from iron ore. And that will only come about when the market demands it, and is prepared to pay for it.

But there is another element to the search for sustainable steel: the social and community one. A focus on decarbonisation pure and simple risks leaving people behind - failing to take account of the need for a 'just transition' to a greener future. Threatened closures of relatively high-emitting plants, for example, can destabilise local communities and create huge headaches for governments, as we have seen recently in the UK.

Increasingly, these dilemmas are being recognised by both business and governments, and the search is on for all-round sustainable steel - sustainable environmentally and socially.

But how is that best defined? There's no shortage of 'green steel' labels and initiatives - over 80 at the last count. But their focus - and rigour - vary hugely. Some are global; some regional. Some cover specific steel products; others just company-wide impacts. Most are principally focused on carbon emissions, and don't take into account wider ESG issues such as labour rights, community impacts or biodiversity.

This lack of alignment creates confusion - just at a time when there's increasing impatience with green claims that are not robust. In Europe, the EU's Green Claims Directive is poised to subject businesses found to be making misleading claims to hefty fines and a ban on tendering for public procurement.

Against this background, there's a case for a certification scheme which covers the full spectrum of sustainability impacts - and does so with a rigour that can ensure its credibility. That's where ResponsibleSteel comes in. The result of wide consultations within the industry as well as civil society, its aim is to provide a common language of assessment that steel's customers, communities, investors, and workforce can all get behind.

It uses independent auditors to certify steel production sites, specific steel products, and company-wide impacts, too. It doesn't just assess progress on cutting carbon emissions, but also issues around the local environment and communities, and the way the workforce and supply chain are treated. As a broad-based certification initiative, ResponsibleSteel does seem to be gaining traction: it's been endorsed by the IEA, UNIDO's Industrial Deep Decarbonisation Initiative, as well as the German government and the Chinese Iron and Steel Association.

This is encouraging. But there is no time to lose. The whole sector needs to demonstrate it is shifting - at speed and scale - to steelmaking which protects both communities and the climate, while providing the essential building blocks of a greener future. Transforming the industry will require bold and universal action. No one can sit on the sidelines. Delay is not an option.

By Annie Heaton, CEO, ResponsibleSteel