Decarbonization led by economic opportunity and demand, not by government regulation: panelists

Panelists at the environmental, social and governance (ESG) session on June 22 said focussed their discussions on ESG matters and the decarbonization of the steel industry.

“The tipping point is the recognition in the steel industry that there’s a huge economic opportunity in the solution,” Greg Bertelsen, chief executive officer of the Climate Leadership Council said.

The move to lower carbon emissions was not due to government regulation but because it made “business sense”, the panelists said.

Katie McCall Larson, vice president of government affairs and sustainability at SSAB Americas told conference attendees:

“This massive growth in sustainable steel in the United States did not happen as a result of any government regulation, but by simply letting the market work,” Dan Needham, executive vice president of commercial at Nucor said.

The panelists also noted that increasing demand for decarbonization was contributing to the steel industry’s push to reduce carbon emissions.

“People are demanding [it] and society is demanding it, and the industry recognized that opportunity to meet the [demands]. I think that’s the big change,” Larson added.

Needham echoed the sentiment: “Customers want to know the actions we’re taking to become more efficient in our production process to lower scope one emissions.”

The Nucor executive said the steel industry is on track to be 80% electric-arc furnace (EAF) production within the next three years.

“We know that the circular process of making steel and electric-arc furnace with low-embodied carbon inputs is more environmentally friendly than extractive steelmaking using iron ore. But the market didn’t recognize that and demand that until now,” Needham said.

“Energy will be the foundation of a cleaner world that will power the cars we use, the homes we live in. The greenhouse gas content of the energy we consume is absolutely critical to a more sustainable future. The industrial base load energy of the future can’t be supplied by solar and wind alone. The only existing technology today to fulfill this clean industrial base load gap is nuclear,” the Nucor executive added.

ESG metrics alignment among service centers “not there yet”: MSCI

Achieving coalescence on ESG metrics among service centers has yet to be achieved, top executives from the MSCI said in a press conference on June 21 zooming in on data aggregation in the industry.

“Clearly, service centers are different than mills. It’s important that we come up with a common metric. We’re not there yet. But we’re working to get alignment within the service center sector, on metrics where we can aggregate industry data, so that individual companies can look at their individual performance,” MSCI president and chief executive officer Bob Weidner said, adding that focusing on ESG was the “right thing to do as a trade association”.

“There will come a point in time, probably in Scope 3, where major original equipment manufacturers will start to ask questions about carbon footprint across the entire supply chain and so we need to get ahead of this curve, but there’s a lot of heavy lifting of work that still has to be done,” Weidner added.

Gathering service center data is a key element in the drive towards ESG-centric philosophy, Richard Marabito, MSCI’s chairman and Olympic Steel’s chief executive officer said.

“It’s important for service centers to be able to benchmark our data for service centers. Obviously, we don’t make steel, so the data comparisons to mills are very different. That initiative to gather the data benchmark is going to be helpful,” Marabito said.

“For publicly traded companies, there’s a spotlight on sustainability. Anyone who’s financing their working capital, like commercial banks, are becoming more interested in a company’s ESG metrics,” Weidner said.

He added: “The Generation Z and Millennial generation are very interested in what a company’s philosophy is on ESG.”

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