Environment

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  • Human Rights & Community Relations
  • Customer Privacy
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  • Business Ethics
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General Issue Category
(industry agnostic)

Disclosure Topics (industry specific) for:
Iron & Steel Producers

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GHG Emissions

Greenhouse Gas Emissions

Iron and steel production generates significant direct greenhouse gas (GHG) emissions, primarily of carbon dioxide and methane, from production processes and on-site fuel combustion. While technological improvements have reduced the GHG emissions per ton of steel produced, steel production remains carbon-intensive relative to other industries. Regulatory efforts to reduce GHG emissions in response to the risks posed by climate change may result additional regulatory compliance costs and risks for iron and steel companies due to climate change mitigation policies. Operational efficiencies can be achieved through the cost-effective reduction of GHG emissions. Such efficiencies can mitigate the potential financial impact of increased fuel costs from regulations that seek to limit—or put a price on—GHG emissions.

Air Quality

Air Emissions

Iron and steel production typically generates criteria air pollutants, volatile organic compounds (VOCs), and hazardous air pollutants, which can have significant localized public health impacts. Of particular concern are sulfur oxides, nitrogen dioxide, lead, carbon monoxide, and manganese, as well as particles such as soot and dust, which are released during the production process. Across North America, Western Europe, and Japan, technological innovation and continuous improvements in steel-making processes have significantly reduced air pollutants from the Iron & Steel Producers industry. However, air pollutants remain a concern due to heightened regulatory and public concern about air pollution, as well as expansion of steel production in emerging markets. Iron and steel production in emerging markets may be impacted by regulatory efforts aimed at curbing air pollution. Active management of facility emissions through implementation of industry best practices across global operations can facilitate the transition to sustainable steel production, lowering costs and potentially enhancing operational efficiency.

Energy Management

Energy Management

The production of steel requires significant quantities of energy, sourced primarily from the direct combustion of fossil fuels as well as energy purchased from the grid. Energy-intense production has implications for climate change and electricity purchases from the grid can result in indirect Scope 2 emissions. The choice between different production processes—electric arc furnaces and integrated basic oxygen furnace—can influence whether a company uses fossil fuels or purchases electricity. This decision, together with the choice between using coal versus natural gas or on-site versus grid-sourced electricity, can play an important role in influencing both the costs and reliability of energy supply. Affordable, easily accessible, and reliable energy is an important competitive factor in this industry, with energy costs accounting for a substantial portion of manufacturing costs. The way in which an iron and steel company manages its overall energy efficiency, its reliance on different types of energy and associated sustainability risks, and its ability to access alternative sources of energy can influence its profitability.

Water & Wastewater Management

Water Management

Steel production requires a substantial amount of water. Companies face operational, regulatory, and reputational risks due to water scarcity, costs of water acquisition, regulations on effluents or amount of water used, and competition with local communities and other industries for limited water resources. This is the case especially in regions of water scarcity, due to potential water availability constraints and price volatility. Companies that are unable to secure a stable water supply could face production disruptions, while rising water prices could directly increase production costs. Consequently, the adoption of technologies and processes that reduce water consumption could lower operating risks and costs for companies by minimizing the impact of regulations, water supply shortages, and community-related disruptions on company operations.

Waste & Hazardous Materials Management

Waste Management

While waste reclamation rates in steel production are high, the industry generates significant quantities of hazardous wastes. There are three main waste types in the industry—slag, dusts, and sludges. These by-products are often recycled internally or sold to other industries. However, process wastes such as electric arc furnace dust, which is regulated as a hazardous material in the U.S. due to its heavy metal content, can have significant environmental and human health impacts, present a regulatory risk, and result in additional operating costs for companies. Risks related to the long-term impacts of waste disposal may result in significant costs, including those associated with contaminated off-site disposal properties, for which iron and steel producers may be held responsible for remediation and restoration activities. Companies that reduce waste streams and hazardous waste streams in particular, and recycle or sell non-hazardous by-products, could therefore lower regulatory risks and costs while increasing revenues.

Employee Health & Safety

Workforce Health & Safety

Industrial processes used in iron and steel production can present significant risks to employees and contractors working at iron and steel plants. Given the high temperatures and heavy machinery involved, worker injuries and fatalities are a matter of concern to iron and steel producers. The industry has relatively high fatality rates, signifying the hazardous work environment and requiring a strong safety culture and health and safety policies. While accident rates in the industry are on a long-term decline, worker injuries and fatalities can lead to regulatory penalties, negative publicity, low worker morale and productivity, and increased healthcare and compensation costs.

Supply Chain Management

Supply Chain Management

Iron ore and coal are critical raw material inputs to the steel production process. Iron ore mining and coal production are resource-intensive processes. Extraction of these materials often has substantial environmental and social externalities affecting local communities, workers, and ecosystems. Such impacts can result in disruptions to mining operations due to community protests, legal or regulatory action, or increased costs of extraction as a result of regulatory compliance costs or penalties. Iron and steel companies could face disruptions as a result, or in some cases, may also be subject to regulatory penalties associated with the environmental or social impact of the mining company supplier. In order to minimize such risks, iron and steel producers may proactively manage their direct suppliers of critical raw materials to ensure that they are not engaged in illegal or otherwise environmentally or socially damaging practices, through appropriate supplier screening, monitoring, and engagement.

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