Relevant Issues (7 of 26)
- GHG Emissions The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
- Air Quality The category addresses management of air quality impacts resulting from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes) as well as industrial emissions. Relevant airborne pollutants include, but are not limited to, oxides of nitrogen (NOx), oxides of sulfur (SOx), volatile organic compounds (VOCs), heavy metals, particulate matter, and chlorofluorocarbons. The category does not include GHG emissions, which are addressed in a separate category.
- Energy Management The category addresses environmental impacts associated with energy consumption. It addresses the company’s management of energy in manufacturing and/or for provision of products and services derived from utility providers (grid energy) not owned or controlled by the company. More specifically, it includes management of energy efficiency and intensity, energy mix, as well as grid reliance. Upstream (e.g., suppliers) and downstream (e.g., product use) energy use is not included in the scope.
- Water & Wastewater Management The category addresses a company’s water use, water consumption, wastewater generation, and other impacts of operations on water resources, which may be influenced by regional differences in the availability and quality of and competition for water resources. More specifically, it addresses management strategies including, but not limited to, water efficiency, intensity, and recycling. Lastly, the category also addresses management of wastewater treatment and discharge, including groundwater and aquifer pollution.
- Waste & Hazardous Materials Management The category addresses environmental issues associated with hazardous and non-hazardous waste generated by companies. It addresses a company’s management of solid wastes in manufacturing, agriculture, and other industrial processes. It covers treatment, handling, storage, disposal, and regulatory compliance. The category does not cover emissions to air or wastewater nor does it cover waste from end-of-life of products, which are addressed in separate categories.
- Ecological Impacts
- Human Rights & Community Relations
- Customer Privacy
- Data Security
- Access & Affordability
- Product Quality & Safety
- Customer Welfare
- Selling Practices & Product Labeling
- Labor Practices
- Employee Health & Safety The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.
- Employee Engagement, Diversity & Inclusion
Business Model & Innovation
- Product Design & Lifecycle Management
- Business Model Resilience
- Supply Chain Management The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labor practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.
- Materials Sourcing & Efficiency
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics
- Competitive Behavior
- Management of the Legal & Regulatory Environment
- Critical Incident Risk Management
- Systemic Risk Management
Disclosure Topics (Industry specific) for:
Iron & Steel Producers
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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.
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.
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
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
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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