Steel is an emissions-intensive sector with demand projected to grow 30% by 2050. In order to avoid carbon lock-in, the decarbonization of this hard-to-abate sector is both demanding and urgent. Financial institutions have a particularly important role to play, since lending is one of the largest sources of capital for the steel sector. This means lenders are well-positioned to play a key role in supporting their clients in their efforts to reach net-zero. For financial institutions, climate alignment means actively pursuing climate objectives by using lending and investment decisions, advisory services, capital markets activities, and advocacy to move the real economy toward net-zero decarbonization pathways. Steering portfolios in line with climate targets will require benchmarking progress and engaging clients, in order to facilitate the decarbonization of the real economy.
Signatories to the Sustainable STEEL Principles commit to the following five principles, described in subsequent sections, which provide lenders with the tools necessary to advance the decarbonization of the steel sector:
1. Standardized assessment,
2. Transparent reporting,
3. Enactment,
4. Engagement, and
5. Leadership