Climate Change

 

Climate Change has become a word which no longer needs a definition anymore. Unfortunately, we live in an era where we are first hand experiencing the effects of climate change. It has not only caused a shift in the Earth’s weather patterns and average temperatures but has also affected a lot of people and their communities. Increased levels of carbon dioxide, methane, nitrous oxides, and other greenhouse gases in the atmosphere, which have been generated since the industrialization, are leading to increased global warming.

Globally there is an increasing awareness regarding the perils of climate change. Under the aegis of the UNFCCC, nations have come together to institute a concerted plan of action under the Paris Agreement to contain the global temperature rise in this century under 2˚C, if not under 1.5˚C. However, in spite of the several actions planned, it is being realised that additional efforts need to be put in place to achieve the global target of 2˚C. One of the major areas that is being now targeted is the decarbonisation of the industrial sectors specifically Steel, Cement, Petrochemicals, and fertiliser, which essentially use fossil fuels as their raw material.

Among the above industries, steel accounts for nearly 50% of the carbon emissions. By 2050, the carbon intensity of steel production needs to be reduced by at least 70% globally, to be able to maintain the temperature rise within the 2˚C scenario. In India, the Ministry of Steel has committed a reduction of a specific emission of carbon dioxide to around 2.0tCO2/tcs by 2030 from 3.0t CO2/tcs in 2005 and transition towards a pathway to ‘Zero Carbon Steel’.

As India’s leading steel producer, JSW Steel, has taken the challenge to combat climate change by incorporating sustainability to its core operations and decision making. JSW Steel is committed to the reduction of a specific emission of carbon dioxide to around 1.95 tCO2/tcs by 2030.

To achieve this JSW has taken a pledge for -
1) Prevention of the causes of climate change
2) Mitigation and adaptation of the impacts of climate change
3) Building resilience to climate change

SDG Mapping of JSW Steel’s Initiatives & Projects

SDG 13: Climate Action

 

JSW Steel and its subsidiaries together account for ~23% of India’s steel production. As one of the premier players in the industry, we consider it our responsibility to proactively reflect on and manage the challenges arising out of climate change. JSW has integrated climate change scenarios in its risk management system to build resilience and strengthen adaptive capacity to climate-related hazards and natural disasters. Some of the major tasks undertaken by JSW Steel to manage its climate change-related risks and opportunities are,

Climate Action Group

Considering the rapid developments related to climate change viz. technology, regulations, taxation, investors’ growing expectations, disclosures, and so on, we have constituted a Climate Action Group (CAG) with cross-functional expertise encompassing R&D, strategy, operations, communications, etc. Facilitated by the Corporate Sustainability Team, the CAG operates as a central think-tank, to formulate and drive the climate change mitigation strategy and actions for JSW Steel towards a low carbon road ahead.

The primary responsibilities of the CAG are expected to be:

 

 

Conducting Scenario Analysis for Climate Change Risk Assessment

JSW Steel is currently conducting a detailed scenario-based climate change risk and opportunity assessment study to understand the long-term impacts of climate risks and opportunities on the company’s operations across India. The study encompasses an assessment of both physical and transition risks that JSW Steel’s operations are likely to face.
With regards to physical risks, JSW Steel is considering two scenarios – a Business-As-Usual scenario and an Optimistic scenario aligned with the Representative Concentration Pathway (RCP) 8.5 and RCP4.5 scenarios respectively, as defined by the Intergovernmental Panel on Climate Change (IPCC). Detailed analysis of site-specific climate risks is being carried out involving the assessment of changes in key climatic parameters that are likely to impact JSW Steel’s operations, such as temperature, rainfall, water stress and sea level rise, under these scenarios.  
As one of the leading producers of steel in India, it is important for JSW Steel to adopt technologies and low carbon pathways that are compatible with the goals of the Paris Agreement. This is why when it comes to the assessment of transition risks, JSW Steel is currently considering the use of  the International Energy Agency’s (IEA) Stated Policy Scenario (STEPS) and Sustainable Development Scenario (SDS) which take into account the 2oC limiting goal of the Paris Agreement. With these scenarios, JSW Steel is currently exploring the various policy, market, technology, and reputational risks and opportunities that are likely to associated with various climate-related elements such as upcoming climate-related regulations (e.g. EU CBAM), market trends (e.g. increased demand for low carbon steel) and a transition towards low carbon technologies (e.g. increased use of hydrogen as a fuel), amongst others.

While the aforementioned scenarios are being utilized to assess JSW Steel’s exposure to climate risks and opportunities, the process of assessment is currently ongoing and could witness the addition of scenarios to suit the business needs of the organization as and if it sees fit.    

ESG Risk Management- Emerging Risks

 

  Climate Action Failure Water Unavailability
Description

The world is already witnessing climate change in the form of unpredictable natural disasters such as floods, extreme temperature, droughts among others. According to world economic forum survey, climate action failure is perceived to be the number one global threat over the next decade, especially considering Climate Action as a common but differentiated responsibility.

We carried out a scenario-based climate change risk assessment exercise to determine potential implications of climate risks on our business. Considering nature of our operations, extensive supply chain and results of the analysis -  irrespective of scenarios, climate-related risks are material for our operations and have the potential to adversely impact our business
Water is shaping up to be a significant environmental and economic risk across the globe. Water risks represent major emerging risks for water-intensive businesses. About 30% of blocks in India are categorized as critical, semi-critical, and over exploited in terms of groundwater availability resulting in Water Stress in these regions. Additionally, more than 60% of India is under Water Stress in terms of water availability. Around 50% of our plants function in water-stressed regions.  Due to our operations being heavily dependent on water availability, scarcity of water can have a long-term impact resulting in disruptions in our operations.
Impact Based on the scenario analysis, we identified that failure of responding to climate change may have significant impact on our business.  Extreme rainfall and flooding may have medium term impact on our operations. An event of extreme weather events such as cyclones, floods, etc. can lead to disruptions in our operations and the supply chain to a larger extent. Disruption in supply chain will lead to unavailability of raw material and/or other necessary equipment thereby, resulting in production losses. Hence, causing interruptions in business operations resulting in financial losses. Thus, leading to both direct physical risks as well as indirect risks. Based on the scenario analysis, we identified water unavailability as an emerging risks to our business that can have the potential to adversely impact our business. The result of Business as usual – IPCC RCP 8.5 and Optimistic – IPCC RCP 4.5 Scenario analysis depicts that water unavailability may have medium/high impact in the medium-term on our plants operations at Vijaynagar, Salem, and Kalmeshwar. As stated, around 50% of our plants function in water-stressed regions. Increase in water stress has a potential to lead to water scarcity, owing to increasing trend in temperature and decreasing rainfall patterns coupled with rising population and increasing demand for water. Due to our operational dependency on water this can lead to potential operational and business disruptions. This will also lead to non-availability of water for the surrounding communities.
Mitigation We carry out climate change risk assessments based on TCFD recommendations. The result helped us to  strengthen our existing business continuity plans and develop risk management plans for each operation. We are also working towards enhancing our low-carbon roadmap, thereby aligning our strategies with the pathway required to achieve the goals of the Paris Agreement. We have developed risk mitigation plan at plants as a part of our risk management process at both corporate and asset/plant level. Our 2030 low carbon and sustainable development plan is an outcome of our risk management process. We have also increased usage of renewable energy, scrap, PCI and NG for deep de-carbonization. We have been working on improving our energy efficiency and process efficiency through best available technologies. Innovative processes including CCUS, green hydrogen in DRI and direct electrolysis. As a part of our mitigating action to address the issue of water scarcity, we evaluate and review our water risks. As a part of our latest water risk assessment, it was found out that around 50% of our plants function in water-stressed regions. We carried out a water resource mapping study with the CII Triveni Water Institute. Along with it, several plant-specific interventions were carried out. At Vijaynagar, we increased utilisation of recycled water resulted in Capacity utilisation of RO plants to 84% utilisation. As part of our water stewardship approach, we have implemented water efficient technologies that help us conserve, reuse and recycle water, enabling judicious use of the resource. At Dolvi, we were able to reduce specific water consumption by installing dry systems such as Dry GCP at BF 2, CDQ at coke oven plant and Dry GCP at Steel Melting Shop #2.

 

Internal Carbon Price

JSW Steel has adopted a shadow internal carbon price of USD 20/tonne

 

Worldsteel Association Climate Action Member

JSW Steel has been recognized by the World Steel Association for fulfilling the commitment to participate in the Climate Action Program for CO2 emissions data collection for two consecutive years. In 2008, Climate Action was launched by Worldsteel with an aim to collect and report CO2 emissions data for both on site-level and company-level CO2 emissions in order to obtain a base level of emissions for the steel industry as a whole. This data collection program is at the core of the steel industry's global steel sectoral approach to climate change. More details can be found here
 

CDP

As the world takes steps towards building climate resilience, disclosure of the same provides the bedrock for ambitious action. CDP is one such global platform for climate related disclosures – actions & progress towards building a truly sustainable economy for people and planet. By reporting to CDP, JSW Group companies (JSW Steel, JSW Energy & JSW Cement) gain competitive advantage as it helps to identify and tackle growing risks and find new opportunities. While JSW Steel has been associated with CDP since a 2013, JSW Energy & JSW Cement started disclosing the data in the recent years. In terms of carbon footprint, JSW Steel has been scored ‘B’ by the CDP. This score pertains to the ‘Management’ band, which acknowledges that the Company is taking coordinated actions on climate issues. The score is higher than the global average, the Asia average and the average of the metal smelting, refining, and forming industry. JSW Steel, due to its consistent and comprehensive CO2 emissions data disclosure, has also been ranked 1 by the CDP Steel Report 2019 in the Data Transparency rankings.

 

CII Working Group

JSW is the convener of the CII Working Group for Green House Gas (GHG) data collection from Industrial Processes and Product Use (IPPU) sectors for Iron & Steel and Cement.

Other key aspects of our climate change resilience building exercise

  • JSW Steel and its subsidiaries together account for ~23% of India’s steel production. As one of the premier players in the industry, we consider it our responsibility to proactively consider and manage the challenges arising out of climate change.
  • JSW Group is shifting its focus to increase the share of renewable/non-conventional energy consumption. JSW Energy is also looking at increasing the renewable energy in its production portfolio through solar & hydropower plants.
  • The most recent initiative of JSW Group to improve the environment is the “Single Use Plastic Ban” across all JSW Group manufacturing locations. Through this JSW has successfully built awareness among its employees and their families on the negative impacts of plastic on our environment and promoted the use of alternative sustainable materials. JSW Steel also plans for plastic waste utilization in its coke oven & Electric Arc Furnace. For more details on all the projects taken up by JSW in the field of waste management please visit the Waste Framework.
  • Through various initiatives of awareness improvement and building institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning, JSW is contributing to Goal 3 of SDG 13.

SDG 12: Responsible Consumption and Production

 

  • Climate change is associated with the exploitation of natural resources and JSW has taken upon itself to achieve sustainable management and efficient use of natural resources. Details of all the projects taken up by JSW in the field of resource management can be found in Resource Framework.
     
  • JSW Steel also incorporates social and environmental considerations while developing products. Key examples include:
    • Speciality steel that is used to manufacture energy-efficient motors
    • Steel structures that are used to install solar panels
    • Products for the agricultural market that have helped farmers to prevent spoilage of food grains and other crop yields
    • Products for the automobile industry that enable import substitution, leading to local employment generation and savings of foreign exchange
  • Given the fact that steel maintains an average of 86% recyclability, a substantial quantity of steel demand can be met using converted steel scrap. This ability of steel to be recycled again and again makes it a perfect material for circular economy.

Circular Economy

  • A circular economy is an economic system of closed loops in which raw materials, components, and products lose their value as little as possible, renewable energy sources are used and systems thinking is at the core.
     
  • As a permanent material, steel is fundamental to achieving a circular economy through the 4 Rs – Reduce, Reuse, Remanufacture & Recycle.
    • Reduce – To promote circular economy of steel, the amount of material, energy & other resources required for steel production should be decreased, along with reduction of usage of steel in products without compromising their quality. JSW Steel has over the years increased the efficiency in the steel making process through augmentation of existing facilities and implementing energy consumption reduction initiatives. JSW also works together with its customers to understand the application of steel in their products and come out with better grades of steel which are well suited to their needs.
    • Reuse – It is the use of material or object again either for its original purpose or for a similar purpose, without significantly altering the physical form of the object. JSW contributes to circular economy by reusing the steel-making byproducts in other applications. For e.g. slag is used in cement making, dust is used for extraction of Zinc, hot process gases are used for electricity generation & tar is used for pitch, plastic and fertilizer production
    • Re-manufacture – It is the process of restoring durable used steel products to as-new condition to be used for the original application again.
    • Recycle – This involves melting of steel products at the end of their useful life to produce new steel. JSW recycles end-of-life steel to produce steel again by replacing hot liquid metal by scrap in the electric arc furnace. Currently, JSW Steel consumes only 4% of scrap and rest all is manufactured by conventional process where iron ore and coal are consumed to make steel. Major challenge was and still persists is the ready availability of end-of-life steel which can be resolved through a national policy in place.
  • JSW supports SDG 12: Goal 6 of sustainability information disclosure by regularly disclosing information on its performance of key sustainability parameters along with the sustainable practices adopted in its integrated report which is publicly available on JSW Steel’s website at link

SDG 9: Industry, Innovation, and Infrastructure

 

  • The Company aims to address the environmental impact of its operations with a strategic and long-term approach. This involves up-gradating and retrofitting infrastructure to make it sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes.  
     
  • To achieve this, JSW is continuously evolving to improve raw material quality, energy efficiency, increase steel-making via electric arc furnace process and exploring possibilities in carbon capture and storage/utilization.
    • Installation of BF gas holder
    • Top-pressure recovery turbine for BF
    • Hot stove waste heat recovery
    • Installation of energy monitoring and management systems
    • Coke oven waste heat recovery boiler
    • LD converter dry Gas Cleaning Plant (GCP) and gas holder
    • LD convertor waste heat recovery boiler

For more details on all the projects taken up by JSW in the field of resource management please visit the Resource Framework.

SDG3: Good Health & Well Being

 

  • JSW aims to contribute to the Goal 3.9 of SDG 3 whose objective is to substantially reduce the number of deaths and illnesses caused due to hazardous chemicals and air, water and soil pollution and contamination.
     
  • The hazardous chemical used or produced by JSW steel are handled with utmost care ensuring no spillage into soil or water, which thereby causes contamination of the surroundings. Such waste materials are disposed as per the Hazardous Waste Management Rule 2016. The effluent generated is treated and reused inside the plant. All of JSW Steel’s manufacturing locations are Zero Liquid Discharge (ZLD) i.e. they do not discharge any liquid effluent outside the plant premises and this water post treatment is either recycled in process or used for domestic purposes or horticulture. For more details on how JSW has implemented ZLD please visit the Waste Water Framework.
     
  • JSW regularly monitors the air emissions to ensure they are under the prescribed limit set by Central & State Pollution Control Board (CPCB & SPCB). In addition to that, JSW also implements various air emission management plans to curb and minimize emissions. Some of them include,;
    • Dry fog systems installed at 105 junction houses for fugitive emission control
    • More than 3 km of wind curtains laid at raw material handling area
    • Installation of scrubbers, electrostatic precipitators and bag filters for emission control

Performance of JSW Steel on Climate Change related Parameters

 

 

JSW Steel regularly discloses its sustainability performance and initiatives in its integrated report. These reports are available here