Toolbox

The steel climate innovation guide

Delivering sustainable flourishing lives for 11 billion people with a full impact approach

Mission Innovation NCI/RISE together with leading steel companies, current as well as potential users of steel, and system change experts have co-developing this climate innovation guide. The aim is to support companies, policy makers, consultants, financial organisations, and other stakeholders to explore an expanded climate and innovation agenda. This agenda with the help of a four step full climate impact approach would have the capacity to deliver flourishing lives for all on a regenerative planet.

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Moving from product substitution to delivering solutions for a future where 11 billion people can live flourishing lives on a regenerative planet in balance with nature

Product substitution: Sustainable produced and circular steel

Step 1 assesses the company from product substitution perspective. This step compares two products and their impact in society. If the product that a company provides has lower impact than the product it substitutes the product substitution results in a lower negative impact. It can be described as a static problem approach.


For companies in the steel sector the product substitution perspective has so far been the main focus meaning fossil free, or low-carbon, steel the main climate goal.


Very little business model innovation is needed for most forms of product substitution, and the benchmarking for performance and climate leadership is only assessed in relation to other traditional steel companies. From a short-term incremental perspective such a benchmarking, that many financial institutions and mainstream consultants do, makes sense. But it undermines much of innovation as it does not include other ways that people’s needs can be met, e.g. by only comparing fossil free steel with non fossil-free steel the much more important question is lost, i.e. where is the steel going to be used, is it for fossil airlines, oil platforms and fossil SUVs, or is it for self-driving super-efficient vehicles, off-shore wind power and rails for public transport? Steel is not one material, there are currently around 3,500 grades of steel in existence, according to the World Steel Association (WSA). So to only talk about fossil-free steel does not make much sense.  


In addition to product substitution on the supply-side, steel companies and experts with a product substitution focus and a carbon tunnel vision tend to invest in, or call for, carbon capture technologies. The reason is that an end-of-pipe approach allows the companies to present a theoretical future where they can claim to be net-zero without any significant business model innovation.


Most steel companies are also aware of the importance of recycling as an important measure to reduce GHG emissions as steel is one of the materials with the highest recycling rates. But fewer are aware that circularity is not a solution unless the overall consumption is addressed. Currently circular use of steel is seldom seen from a global sustainability perspective, but just a way to reduce scope 1-3 emissions.


Product substitution includes activities, such as

Shift from fossil fuel intensive steel to fossil free/low-carbon steel


System boundaries

The emissions over the value chain for fossil free/low-carbon steel compared with the value chain for current fossil-based steel.


Who belongs in this category only

Classical steel companies, classical steel technology experts from large consulting firms, conservative investors with a narrow risk focus.


Potential relation to start-ups

In general, start-ups have a limited role for steel companies in this category, but in some areas start-ups have been

  • Start-ups with optimisation measures  
  • Support CCS and offsetting start-ups if the energy company does not have the capacity to reduce its emissions
Step 1:
Product substitution

Examples

Measures

  • Reduction of GHG during the steel production with technical innovation
  • Tonnes/m3 fossil material substituted by fossil free/low-carbon steel
  • Sometimes CCS investments are part of the strategy

Goal

  • Reduction/zero-emission targets for scope 1-3 emissions
  • If creative reporting is the goal, carbon offsets might also be bought to be able to communicate lower/zero emissions from scope 1-3

Data

  • GHG per m3 of forest product
  • Number of bio-based products sold and what % of those substituted existing fossil-based products
  • Amount of forest under ownership and the carbon stored in that forest

System substitution: Smart bio-based buildings / paper

Step 2 assesses the company from a system substitution perspective. This step expands the focus from the product the company provides to the system that provides value for the end-customer/user. For steel companies a system substitution approach requires an expanded focus where the systems using the steel to provide for human needs are also included, including the systems using steel products to provide nutrition (e.g. agricultural solutions), energy (e.g. wind and solar power), mobility/access (e.g. public transport and self-driving vehicles), shelter and a comfortable temperature (e.g. smart steel buildings), etc.


In recent years there has been an increased interest in the moving up the value chain among steel companies. A new generation of companies shift focus from only steel to more tailor-made solutions such as smart public transport, self-driving vehicles, and smart steel building design. Often these offerings are part of strategies to capture rapidly growing markets.


System substitution include activities, such as:

  • Fossil-free steel for windmills and other renewable energy solutions
  • Fossil-free steel for public transport (including rails, trains and busses as well as special steel for self-driving vehicles)
  • Fossil-free steel for extremely light weight and safe self-driving vehicles
  • Fossil-free steel for sustainable lifestyles, including outdoor equipment, music equipment and research equipment.


System boundaries

The total GHG from new smart solutions with fossil-free/low-carbon steel system solutions compared with existing fossil system solution.


Who belongs in this category (that also include a product substitution approach)

Leading steel companies, energy innovators, building and mobility/access solution providers. Steel experts with a system understanding (often from smaller consulting firms and think tanks), progressive investors that focus on climate impact rather than only reduced risk from a company/sector perspective.  


Role of start-ups

In general, start-ups have a role in providing new smart steel solutions, often from the user perspective. In all areas where rapid change is taking place, much is driven by start-ups including:

  • Design, building and deployment of self-driving vehicles
  • Design, building and deployment of smart innovative renewable energy solutions such as solar and wind, but also wave energy and other new solutions.
  • Design, building and deployment of smart energy efficient buildings.


Step 2:
System delivering
on human needs

Examples

Measures

  • Business innovation with payment per service provided instead of weight of steel sold
  • Demand side action for radical resource efficiency
  • Collaboration with providers of solutions that use steel, or could use steel
  • Enable end-customers to understand benefits and take actions for smart steel solutions
  • Investment models based on system solutions not just different kinds of steel

Goal

  • Zero carbon per m2 of affordable buildings provided and other services
  • Half-earth compatible land-use per m2 of affordable buildings provided and other services

Data

  • GHG per m2 of affordable buildings provided, GHG per km transport solution per service provided, GHG per MWh produced from renewable energy
  • Land-use per m2 of affordable buildings, transport, renewable energy, etc

Delivering on Human Needs – enabling flourishing lives

Step 3 assesses the company based on how it delivers on human needs, with particular focus on the potential contributing to flourishing lives. This step shifts the focus from how the company operates to why the company operates from a purpose driven perspective.  When the focus shifts from the operations of the company, covered by most of current ESG reporting and compliance approaches such as Scope 1-3 reporting, to how the company delivers on human needs three things tends to happen.

  1. The focus shifts towards people and nature and what they need to flourish. Companies that are purpose driven have an advantage as they already view their products and profit as tools to deliver a better society, rather than intrinsic values.
  2. It becomes obvious that a sector approach is often part of the problem and that a cluster approach where the company together with other stakeholders collaborate to deliver on human needs, not just to push more products out the door of the company, is the correct approach to follow.
  3. Introduction of new tools and KPIs that allow the company to assess its impact in relation to human needs and global sustainability. For sustainability this means a shift in focus from reporting and compliance (that targets laggards) to impact assessments and tools for strategy development (that support leaders).


From a steel company perspective many exciting clusters exist as solutions with steel are included in most cases when solutions are delivering on human needs. Still, steel-based clusters that are solution providers for 11 billion people living flourishing lives on regenerative planet are still not very common.  Many steel companies still lack a strategy for a future where solutions with steel deliver a future where 11 billion people live flourishing lives while on a regenerative planet in balance.

When such smart steel clusters do exist they often exclude traditional steel companies, perhaps because most stakeholders in the steel sector still struggle to link their current business models and missions to human needs. Clusters that deliver on human needs in ways that are globally sustainable are extremely resource efficient and when steel materials are included it is often part of a modular design that is based on a strategy where the steel is used in an optimal way. Using upcycling and resource efficiency makes it hard for traditional steel companies to join as they still focus on selling maximum amount of steel with the highest possible price, and often see efficiency measures, and especially dematerialisation, as a threat. With a new generation of purpose driven start-ups with smart steel system solutions, and larger steel companies exploring how human needs can help them innovate, this is probably about to change.


Delivering on human needs with a smart steel focus include a wide range of activities, such as:

  • Clusters that focus on key services needed to deliver on human needs (comfortable temperatures, nutritional and healthy living that includes both nutrition, physical and mental health, support from creative and caring people).
  • Business model development and exploration of purpose driven missions with a focus on delivering on human needs.


System boundaries

LCA for the full fossil free/bio-based and resource efficient bio-based systems delivering on key human needs, compared with existing fossil-based  and resource intensive systems delivering on human needs with steel solutions.


Who belongs in this category (that also include a system substitution approach)

Only a few large steel companies have begun to explore a human need-based approach. In this category we find new clusters with focus on buildings/shelter, nutrition, health, etc. that include smart resource efficient steel solutions. Here start-ups are very much leading the work, often with system solutions that address multiple challenges such as water, energy and nutrition. The implementation are often on the city scale with active involvement from policy makers.


Role of start-ups

In this category start-ups are in the lead as many of the new ideas for how to deliver on human needs are found among start-ups, especially purpose driven start-ups. New clusters are usually needed and many of the new solutions are identified and implemented by start-ups.

Step 3:
11 billion people
living flourishing lives

Examples

Measures

  • Build capacity to assess impact on human needs in clusters
  • Ensure capacity building away from narrow engineering knowledge to system knowledge and business model innovation
  • Ensure that revenues are not linked to the amount steel sold, but the benefits people get while living flourishing lives within half-earth boundaries
  • Collaborate with and support  start-ups in relevant areas

Goal

  • Enabling the maximum number of people living flourishing lives in a way that is compatible with a world where 11 billion people live flourishing lives on a regenerative planet

Data

  • GHG and land use per person with their human needs provided for
  • Number of flourishing life-years contributed to

Marketing – advocacy for sustainable rules, values, and structures of tomorrow

The necessary exponential uptake of sustainable 1.5 °C innovations requires innovation on an unprecedented scale. Rapid emission reductions are needed on a global scale and innovations are required to ensure avoided emissions for future development to allow poor people to move out of poverty. Assessments indicate that the carbon emissions of the richest one percent are more than double the emissions of the poorest half of humanity.

As the data clearly indicates the global climate work must work on two parallel fronts.

First, large parts of the global population need transformative system innovations in order to urgently move out of poverty and towards flourishing lifestyles while avoiding emission increases.

Second, the affluent population currently contributing the bulk of emissions also need transformative system innovations to deliver the emission reductions needed. Only with feedback loops that help accelerate an exponential uptake of 1.5 °C compatible system solutions is it possible to deliver the extremely resource efficient solutions needed for a future capable of delivering flourishing lifestyles for an equitable future for 11 billion people.

Today, a product or service cannot be assumed to be an isolated phenomenon, as it will affect the surroundings when being used. Deploying innovations will affect different parts of society with some products, infrastructures and institutions being strengthened, while others weakened. Exactly how society will be affected by new solutions is determined by many factors.

Carbon feedback can be categorised into three interlinked strategic parts:

Product feedback
Assessing the products that will be promoted or discouraged by the company.

Infrastructure feedback
Assessing changes in infrastructure that promote or discourage 1.5 °C compatibility due to the company. This includes both the physical and digital infrastructure.

Institutional feedback
Assessing values and regulations and how changes in these will affect 1.5 °C compatibility due to the action by the company.

Step 4:
Shaping the society of tomorrow

Examples

Measures

  • Support for concepts like Half-Earth, Ecocide, flourishing lives for 11 billion people and all living beings
  • Marketing that supports sustainable lives where the focus is on creativity and care for all living beings, not material consumption
  • Invest in work that increases the understanding of flourishing lives where creativity is supported
  • Collaborate in clusters to enable new structures that support global sustainability

Goal

  • Rules, values and structures in support of 11 billion people living flourishing lives on a regenerative planet

Data

Human need based data related to new rules, values and structures structures in support of 11 billion living flourishing lives on a regenerative planet

To start benchmArking and develop the business model, and then assess impacts in each of the steps please see:
TOOL

Full climate impact assessment with avoided emissions

Self-Assessment Guide – Full Climate Impact Assessment for Companies that Want to Deliver Globally Sustainable Climate Solutions with positive impact on Human Needs.
TOOL

City/Region strategy development and benchmarking

Assessment Guide – City/Region Strategy Development and Benchmarking for Cities/Regions that Want to Expand their Climate and Innovation Agendas and focus on human needs and their role as solution providers for a future where 11 billion people can live flourishing lives.
TOOL

Business model development and benchmarking

Self-Assessment Guide – Business Model Development and Benchmarking for Companies that Want to Deliver Globally Sustainable Climate Solutions with positive impact on Human Needs.
Framework

Full Climate Impact Assessment

Full Climate Impact Assessment for Companies with Solutions. Beyond Companies own emissions (scope 1–3) to Solution providers impact in society with focus on Human Needs (Avoided Emissions).
View publication
Report

Beyond Corporate Carbon Footprints

Expanding from only footprint emissions (Scope 1-3) to selling solutions to deliver sustainable handprints (avoided emissions).
View publication
Graphic

Innovation Quadrant for 11 Billion flourishing lives

Social development / Personal growth – Climate & Land-use Matrix: Human Needs & Innovations