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 rated ‘A’ by the CDP. This score pertains to the ‘Leadership’ band, and is the highest echelon one can reach in terms of CDP ratings - which acknowledges that the Company is implementing current best practices. This score is higher than the Global average of C, Asia regional average of C, and the Metal smelting, refining & forming sector average of C.

 

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.