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ArcelorMittal feels able to talk about health and safety challenges, but environmental concerns are conspicuous by their absence from its first corporate responsibility report
In its first formal responsibility report, ArcelorMittal, the steel giant formed two years ago through the merger of Arcelor and Mittal Steel, provides a frank assessment of the current state of its corporate responsibility strategy, measurement and assurance.
The report’s disciplined (though unexciting) tone reflects ArcelorMittal’s methodical approach to building an integrated corporate responsibility foundation that is embedded throughout the company’s global operations. After slogging through nearly 20 pages of extensive process detail – business case, management structure, oversight and so on – it seems that ArcelorMittal takes sustainability seriously, and is determined to get it right the first time out.
To its credit, ArcelorMittal highlights stakeholder outreach efforts as instrumental in helping to fix the direction of its corporate responsibility efforts. The company takes part in activities ranging from facility-level community discussions to the production and broad dissemination of ArcelorMittal web TV episodes on topics such as health and safety. ArcelorMittal’s outreach encompasses direct communication with investors, both mainstream and socially oriented. The company even intends to put on a socially responsible investment-targeted roadshow, an activity most firms currently do not contemplate, much less undertake.
Investors may also be interested in ArcelorMittal’s quantification of spending on environmental, social and governance activities. Throughout the report, the company details costs of health and safety improvements, employee training, research and development, and energy efficiency projects, among others. Ideally, we would see ArcelorMittal close the circle on this information by quantifying and reporting the monetised benefits of these initiatives in future reports.
ArcelorMittal faces considerable expenditure on improving health and safety infrastructure, particularly at older or more recently acquired facilities. This need is painfully clear, exemplified by an accident in which 30 employees died at ArcelorMittal’s Abiskaya mine in Kazakhstan in January.
ArcelorMittal is unflinchingly honest in reporting this catastrophe, and positions its response to this incident and overall site safety as a priority above any other. Among new procedures and infusions of funds for training and facilities improvements, ArcelorMittal has changed pay guidelines for senior managers to reflect health and safety performance.
Another area of solid, transparent disclosure is ArcelorMittal’s discussion of how it approaches greenfield development (siting of new mines or facilities in non-industrial areas). Not only does ArcelorMittal identify specific greenfield sites, but the company also discloses the number of people affected and how it is working with local agencies and authorities to minimise the dislocation to residents’ lives.
For example, ArcelorMittal outlines six principles supporting resettlement action plans, including ensuring residents’ continued ability to make a living, providing adequate housing, and minimising disruption to the social fabric. ArcelorMittal’s choice of words implies full acknowledgement of the responsibility of ensuring fair treatment of affected individuals and communities.
As ArcelorMittal continues its integration, the company will have to disclose more fully details of its environmental performance. This first report makes a decent start with limited global statistics, but the sheer size and nature of the company’s operations demand much more segmented, regional and specific data on energy, material and water use.
A particularly troubling statement on water use reads: “A large proportion of [the company’s water consumption] occurs at our North American sites where access to resources is effectively unrestricted”. This wording either demonstrates truly poor phrasing or else implies that the company only pays attention to critical natural resources if they are in short supply. In any event, more specific targets for water conservation (and other environmental performance markers) would be welcome.
ArcelorMittal faces another challenge in addressing climate change. With steelmaking worldwide contributing more than 3% of global man-made carbon dioxide emissions (according to the World Resources Institute), ArcelorMittal will be under pressure to increase efficiencies and search out innovative production processes in order to cut emissions.
Two further areas are conspicuously absent from ArcelorMittal’s report. The first, acknowledged by the company, is information on the impact of ArcelorMittal’s mining operations. The second is diversity in the workforce. Although ArcelorMittal rightly claims that, as a global company, it carries “no particular passport”, it misses an opportunity to discuss gender equality across its operations, and minority equality in those countries where such populations are defined.
In all, ArcelorMittal’s consistent and considered reporting approach will serve the company well, especially if it continues to provide in-depth progress updates on strategy development as well as specific indicators and targets.
Snapshot: ArcelorMittal Corporate Responsibility Report (Taking Responsibility for Transforming Tomorrow)
Follows GRI? Yes, but no application level declared.
Assured? Assurance “roadmap” is in development.
Materiality analysis? No. Focused on business case.
Stakeholder input? Yes
Seeks feedback? Yes
Key strength: Detailed disclosure of strategy-setting process.
Chief weakness: Current lack of data, especially with regard to mining operations.
Pleasant surprise: Comprehensive stakeholder map, ArcelorMittal web TV episodes.
2007 Corporate Responsibility Report
ArcelorMittal Web TV
If you want to hear more about best practices in sustainability reporting, you might be interested in a conference we're doing on 11th-12th June 2009, in Brussels. It's called "The Global Corporate Responsibility Reporting Summit".
It's about how to produce an effective CR report and engage all your stakeholders in the process. If that's of interest, you can call us on +44 (0) 207 375 7165 or have a look on www.ethicalcorp.com/globalreporting/