Asian investors expect transparency from steel industry as it transitions

AIGCC convenes roundtable of investors and sector to gain clarity on emerging technologies

Investors in Asia would like to see greater transparency and more disclosure on decarbonisation from the steel sector in order to give them confidence to allocate capital to the appropriate companies and projects in the region.

This is one of the takeaways from a roundtable convened in October by the Asia Investor Group on Climate Change (AIGCC) that signalled the start of one of the Climate Action 100+ sectoral focus for industries in Asia.

The steel sector is responsible for more than 7% of global energy sector CO2 emissions and is a key enabler for accelerated transition along the value chain, signifying huge potential as an industry to decarbonise and to create lasting contributions to a net-zero emissions economy.

Valerie Kwan, director of stewardship and corporate engagement at the AIGCC said: “With deeper appreciation of existing efforts and gaps within the industry, investors are well positioned to advocate for supportive policies and financing incentives to strengthen the development of a green steel value chain.”

The current technologies for net-zero steel exist with varying levels of technological readiness, but the investors at the roundtable identified that steelmakers could take several actions to become more attractive, in particular:

  • Establish a clearer, time-bound, comprehensive definition of “transition technologies for steel” from steelmakers, to ensure a shared understanding and effective decision-making across the industry.
  • Have greater disclosures and transparency on the commercial viability of decarbonising technologies at different technology readiness levels, in order to overcome technological barriers for such technologies.
  • Increase peer-to-peer sharing of technological know-how and cross-sectoral collaboration (such as with the utilities sector) to overcome challenges with the scaling up of emerging technologies.
  • Extend the life cycle of by-products from steelmaking through recycling

Hisaya Kambayashi, senior stewardship officer at Sumitomo Mitsui Trust Asset Management said: “The unique opportunity brought about by this dialogue with steelmakers across Asian markets has enabled a cross-pollination of ideas. This includes policies to facilitate the trading of scrap steel as part of the industry’s transformation across the region and considerations to mobilise energy intensive processes close to sources of renewable energy. Investors share expectations for transparency from steelmakers as they develop their roadmap to transition using emerging technologies.”