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, including the Chief Sustainability Officer (CSO), 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

 

Name of the Emerging Risk	Natural disasters and extreme weather events	Biodiversity Loss
Description	As a result of climate change, there have been a surge in the extreme weather events resulting into natural disasters. Considering our value chain including our supplier base is spread across various geographies, there can be significant challenges to our value chain as well as operations. Any changes in weather conditions or other natural exigencies across the any geography can have a significant impact which are beyond the control of the Company.	Biodiversity loss poses a great threat to ecosystem balance. Our natural habitat is being exploited at an unprecedented rate leading endangered of species, habitat loss, alteration of landscape, and impact on wildlife. Some of these impacts are irreversible in nature. The Global Risk Report 2023 published by World Economic Forum has also identified biodiversity loss as one of the top 5 risks.
Impact	The world is already witnessing extreme weather events due to the effect of climate change, causing unpredictable natural disasters such as floods, extreme temperature, droughts among others. Considering nature of our operations, extensive supply chain and results of our assessments – irrespective of scenarios, climate-related risks such as extreme weather events are material for our operations and have the potential to adversely impact our business. An event of extreme weather events such as cyclones, floods, etc. can lead to disruptions in our operations as well as the supply chain to a larger extent. Any disruption in supply chain will directly lead to unavailability of raw material and/or other necessary equipment thereby, resulting in production losses, increased cost, loss of revenue, and higher prices or shortages for customers. Thus, leading to both direct as well as indirect physical risks.	Biodiversity loss can lead to ecosystem collapse. Considering the nature of the industry, we are prone to have a direct impact on the adjacent biodiversity. Any loss of biodiversity can lead to direct or indirect risks such as regulatory risks and risks due to community unrest, and reputational risks. These risks can lead to economic and financial losses to the company through operational disruptions, legal fines/ penalties, loss of consumers. Much of these risks arise from our upstream supply chain which involve sourcing of raw materials required for production.
Mitigating Actions	We closely monitor and forecast the probability of occurrence of such events through our established risk management framework. We have integrated sustainability risk into our organizational ERM. We carried out a scenario-based climate change risk assessment exercise for our Vijayanagar, Dolvi, and Salem operations to determine potential implications of climate risks on our business. Based on the scenario analysis, we identified that extreme rainfall and flooding may have medium- to long-term impact on our operations. In response to it, we have a business continuity and a disaster management plan in place, reviewed and approved by the Board. To make our BCP more robust, we plan regular training and awareness sessions across the plant locations. We also conduct periodic BCP testing to check its efficacy and improve it further based on the gaps observed during testing. We have also diversified our supplier base to make it more resilient.	We recognize biodiversity as a core focus area. We are aligned to the National Biodiversity Targets and take a risk-based approach for making biodiversity a key decision-making consideration. We are also a Working Group (WG) and founding member of the India Business and Biodiversity Initiative (IBBI) Chapter of CII-CESD. As an effort to conserve biodiversity, we have developed biodiversity management plans, especially for our mining operations. We have taken up a Mangrove restoration project at Dolvi and planted more than a million saplings in the span of 4 years thereby bringing 340 hectares of land under forest cover which is estimated to have carbon capture, over a 25-year period, of approximately 185,000 tonnes. We are also committed to “No Net Loss” of biodiversity by 2030.

 

Internal Carbon Price

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

Lobbying and Trade Associations

The purpose of our advocacy is to find common ground and act collaboratively with stakeholders. We work with industry, governments, civil society and consumers at a local, regional, national and international level. We have a robust process to assess and determine the importance of public policy issues.

The Board and the Sustainability Committee have stewardship over political lobbying activities, providing oversight on our approach and ensuring alignment with the Company’s interests and strategic priorities, in accordance with the applicable policies including Policy on Influencing Public and Regulatory Policy, Policy on Business Conduct, and Climate Change Policy.

Our direct lobbying efforts are aligned with our policies and strategic priorities and goals. We may engage in indirect lobbying through multiple industry organizations and think tanks at local, regional and global level, such as WBCSD, WSA, ISA, CII, FICCI, ASSOCHAM, etc. We believe in the power of collective action, especially on challenging topics that cannot be tackled alone, including many environmental and social issues. Our membership in any such organization does not imply that we agree with or endorse every position that these groups may take.

We work with the other members to ensure that lobbying, if any, conducted through trade organizations reflects our values and concerns. We engage in climate-related advocacy to encourage the reductions in greenhouse gas emissions and consequently, transition towards net zero through government policies and private sector leadership. Our lobbying efforts are aligned with the Paris Agreement, and include strong support for policies that will incentivize emission reductions.

We also take part in providing our alignment on topics such as Greenhouse Gas Emissions, Energy Transitions, Carbon Tax and Carbon pricing, Water and Waste Management, Sustainable Mining. In case of any misalignment, we ensure that we reserve our right to act as an individual company and transparently communicate our stand to the respective stakeholders.

We regularly review our involvement in industry and trade organizations to assess the relevance of our participation in line with our strategy, which is aligned with the Paris Agreement. The purpose of our advocacy is to find common ground and act collaboratively with stakeholders at all our operational locations.

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.