Industrial giant ArcelorMittal has taken on its critics and is trying to establish structured corporate responsibility programmes that are relevant across its global operations

Industrial giant ArcelorMittal has taken on its critics and is trying to establish structured corporate responsibility programmes that are relevant across its global operations

In the UK at least, ArcelorMittal is probably most famous for its eponymous billionaire chairman, Lakshmi Mittal. However, elsewhere in the world – in more than 60 countries where the company operates – ArcelorMittal is known for its vast steelmaking business.

ArcelorMittal was formed in 2006 from the merger of Mittal Steel and Arcelor, itself the result of a 2002 merger between Aceralia of Spain, Usinor of France and Arbed of Luxembourg. The result was the creation of the world’s largest steel company, employing about 300,000 people worldwide.

However, because of the vertically integrated nature of the business, ArcelorMittal is also the world’s fourth largest mining firm, including iron ore and coal mines in countries such as Kazakhstan, Ukraine, Mexico and South Africa.

ArcelorMittal arrived on the corporate responsibility scene about two years ago. At the time, the company hired long-standing specialist Charlotte Wolff, who joined from Telefónica O2 Europe. “It looked like a fantastic opportunity to make a difference in a massive, high-impact business,” Wolff says.

Certainly, Wolff’s management reporting line suggests that the company really takes the corporate responsibility agenda seriously: she reports to Roland Verstappen, vice-president for international affairs and more recently also VP for the corporate responsibility function. In too many companies, corporate responsibility reports into the communications function, which can often make it difficult for the issues to gain traction with the operational aspects of the business.

At ArcelorMittal quite the contrary is true, and indeed part of the reason for establishing a corporate responsibility function was to help make the 2006 merger work. Verstappen explains: “The merger itself, between Mittal and Arcelor, meant we were in touch with many governments, unions and others. We had to make clear that the merger made sense, not just in financial terms to shareholders, but also to all those other people and communities our new company would impact on.”

Strategic imperative

However, as Verstappen makes clear, the company continues to see its corporate responsibility activities as a strategic imperative, not a philanthropic or public relations exercise, especially given the presence that the ArcelorMittal has in emerging markets. He says: “Governments assume that companies like ours will bring valuable skills and investment. They want to know about the ‘what else’ we’re going to bring in terms of the wider development agenda.”

While understanding the importance of the issues for the success of the company, ArcelorMittal has resisted the temptation to create a large corporate responsibility team. “We’d rather have to punch above our weight than have an over-inflated group at the centre,” Wolff says.

The company has required each business unit to appoint a manager to have responsibility for corporate responsibility issues. These coordinators are not corporate responsibility specialists. Their strength, Wolff argues, comes from the fact that they understand the business and can therefore make the responsibility agenda relevant in operational and commercial terms.

Wolff also stresses that the central team tries to keep the core requirements they make of the business units as simple and clear as possible. She acknowledges that in many other companies excessive demands from the corporate centre can breed cynicism within the business as to the real value of corporate responsibility.

ArcelorMittal local businesses are required to appoint a corporate responsibility coordinator and set up a committee that proactively manages the issues it sees as relevant to the success of the local business. The only other requirement is to adhere to company policies and standards, including the ArcelorMittal community engagement standard.

“All the local CEOs received a letter from our group management board telling them that managing corporate responsibility was mandatory,” Wolff says. “But what issues they prioritise, and how they go about it is up to them, as long as they follow our core principles. The local management teams understand the local circumstance much better than we ever can.”

In terms of responding to the issues they face, neither Wolff nor Verstappen shy away from accepting that ArcelorMittal’s business is a high-impact one, and as a result health and safety is a key priority. Their Journey to Zero project, launched group-wide in 2008, targets “no injuries or illnesses as our ultimate goal”.

Since the project’s launch, time lost to injury went from 2.4 (hours per 1,000,000 man hours) to 1.6 – a 33% improvement. In the past year the company has signed a global health and safety agreement with trade unions and invested in the ArcelorMittal University to provide training for employees.

However, the wider social and environmental impact of the business is also taken seriously. According to Verstappen, it is an imperative laid down by Lakshmi Mittal himself that “we need to engage with any stakeholder within a 10-mile radius of our plants”.

Community engagement

In the US, for example, the company has established Councils for Stronger Communities (CSCs), designed to build better links with the communities surrounding their sites. Meetings typically take place once a month, and the agenda ranges from site safety to the making and managing of grants to neighbourhood projects. The CSCs also implement global ArcelorMittal community programmes in their own areas.

Among the company’s most high-profile investments is in Liberia, a country torn by civil war until 2003. In 2005, the company negotiated a 25-year concession to develop iron ore deposits in the north-west of the country near the border with Guinea. The company says in its corporate responsibility report: “As the first major company to enter Liberia since the end of the war, we understand we have a particular responsibility to the country and its people.”

ArcelorMittal’s preparedness to deliver on this commitment seems to be supported by the fact that the company has already responded to concerns raised over its economic contribution to the country. Amid pressure from non-governmental organisations, notably Global Witness, it renegotiated in December 2006 its initial contract with Liberia with terms more favourable to the country.

The company has also committed to provide the government with financial reports on the quantity of iron ore produced; construct, maintain and operate health facilities in the concession area with modern equipment; provide training for Liberian citizens for skilled, technical, administrative and managerial positions; and invest in key infrastructure such as rehabilitating 260km of abandoned railway and developing the port at Buchanan for shipping.

ArcelorMittal is unlikely ever to be free of criticism; indeed there are campaigners targeting the company specifically. Global Action on ArcelorMittal, for example, is campaigning for the company to “invest in pollution prevention and health and safety at its steel mills and coal and iron ore mines”. And the company was nominated in the Climate Greenwash awards this year for “pseudo-solutions to climate change”.

Nonetheless, ArcelorMittal does seem to be genuinely committed to finding locally relevant solutions to the corporate responsibility issues affecting its business, never-ending though that list may prove to be.