ISSB Standards provide a structured approach for companies to disclose sustainability-related and climate-related financial information that may be relevant to investors and other users of general-purpose financial reports. For the iron and steel industry, these disclosures are particularly important because steel production is energy-intensive and can generate significant greenhouse gas emissions.
The iron and steel industry plays an important role in infrastructure, construction, manufacturing, transportation, and economic development. However, the sector also faces increasing pressure to improve energy efficiency, reduce greenhouse gas emissions, manage climate-related risks, and communicate sustainability performance more transparently.
Using ISSB Standards can help companies organize climate-related information in a more consistent and decision-useful manner. Companies can identify significant climate risks and opportunities, evaluate their potential financial effects, improve internal risk management, and communicate relevant information to investors and other stakeholders.
This article explains how ISSB Standards can support climate-related disclosures in the iron and steel industry, including the major sources of carbon emissions, reasons for preparing climate disclosures, key implementation steps, and the potential benefits of professional assistance.
What Are ISSB Standards?
ISSB Standards are sustainability disclosure standards developed by the International Sustainability Standards Board.
They are intended to improve the consistency, comparability, and usefulness of sustainability-related financial information provided by companies.
For climate-related reporting, companies can use the relevant ISSB climate disclosure requirements to explain how climate-related risks and opportunities may affect their business strategy, financial performance, cash flows, access to finance, and long-term prospects.
For companies in carbon-intensive industries such as iron and steel, this type of disclosure can provide stakeholders with a clearer understanding of how management is responding to climate-related challenges.
Objectives of Climate-Related Disclosures Based on ISSB Standards
Climate-related disclosures based on ISSB Standards can help companies communicate relevant information regarding climate risks and opportunities.
The source article identifies several major objectives:
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Reduce Investment Risk:
Providing more detailed information about how climate change may affect financial and operational performance can help investors better understand corporate risk. -
Encourage Proactive Climate Management:
Companies can identify climate-related risks and opportunities and develop appropriate strategies before those risks become more significant. -
Improve Transparency and Accountability:
Clear disclosure of climate information, emissions data, and mitigation strategies can strengthen transparency toward investors and stakeholders.
Why ISSB Standards Matter for the Iron and Steel Industry
The iron and steel industry has several characteristics that make ISSB Standards particularly relevant.
Steel production requires substantial amounts of energy, raw materials, and industrial processing. Depending on production technology, companies may also generate significant direct and indirect greenhouse gas emissions.
Climate-related risks may affect:
- Energy prices.
- Raw material availability.
- Carbon-related regulations.
- Production technology.
- Customer demand.
- Access to financing.
- Supply chains.
- International competitiveness.
ISSB Standards can help companies explain how these factors may influence business performance and long-term strategy.
How Does the Iron and Steel Industry Generate Carbon Emissions?
Iron and steel production involves several stages that can generate greenhouse gas emissions and other air pollutants.
The source article explains that the production process may begin with iron ore mining and processing, continue through pig iron production, steelmaking, casting, rolling, and finishing. :contentReference[oaicite:1]{index=1}
1. Mining and Raw Material Processing
Iron ore must first be extracted and processed before it can be used for steel production.
This stage may include:
- Iron Ore Mining: Extraction of iron ore from mining locations.
- Crushing and Grinding: Ore is reduced into smaller particles.
- Ore Processing: Impurities are removed and the iron content is concentrated.
Greenhouse gas emissions during this stage can be associated with diesel-powered mining equipment, electricity consumption, transportation, and material-processing activities.
2. Pig Iron Production
Traditional integrated steel production may use a blast furnace to produce pig iron.
Iron ore, coke, and limestone are introduced into the furnace.
Coke serves both as a fuel and a reducing agent, helping convert iron ore into molten iron.
This process can generate substantial CO2 emissions because carbon is used directly in the chemical reduction process and as an energy source.
The decomposition of limestone can also contribute to carbon dioxide emissions.
3. Steelmaking through BOF or EAF
The next stage involves converting iron or scrap steel into steel products.
Two important technologies are:
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Basic Oxygen Furnace (BOF):
Molten pig iron is combined with scrap, and oxygen is introduced to reduce carbon content. -
Electric Arc Furnace (EAF):
Electrical energy is used to melt steel scrap or other metallic inputs.
The carbon intensity of these production routes can vary depending on raw materials, energy sources, process efficiency, and electricity generation.
ISSB Standards and Steel Production Emissions
Understanding emission sources is important when preparing climate-related disclosures based on ISSB Standards.
Companies need reliable information regarding where greenhouse gas emissions occur and how climate-related factors may affect financial performance.
Relevant information may include:
- Direct process emissions.
- Fuel consumption.
- Purchased electricity.
- Raw material production.
- Transportation.
- Waste management.
- Supply-chain emissions.
4. Casting and Forming
Molten steel is cast into intermediate products such as slabs, billets, or blooms.
The material may then undergo:
- Hot Rolling: Heated steel is rolled into the required form.
- Cold Rolling: Steel may be processed at lower temperatures to achieve specific mechanical or dimensional properties.
Energy used for reheating, rolling, and associated processes can contribute to the overall environmental footprint of steel products.
5. Finishing and Special Treatment
Steel products may undergo additional processes such as cutting, forming, coating, or surface treatment.
These processes generally have different environmental impacts depending on the technology and energy used.
Companies preparing disclosures under ISSB Standards should consider which stages are material to their climate-related risks and emissions profile.
Products of the Iron and Steel Industry
The iron and steel industry produces a wide variety of products for different sectors.
Examples in the source article include: :contentReference[oaicite:2]{index=2}
- Structural steel for buildings and bridges.
- Steel pipes for oil and gas transportation.
- Steel sheets for the automotive industry.
Different products may have different production routes, energy requirements, raw material profiles, and greenhouse gas intensities.
Iron and Steel Companies in East Java
The source article identifies several companies associated with the iron, steel, pipe, and heavy-industry sector in East Java, including Steel Pipe Industry of Indonesia, Indal Steel Pipe, Gunawan Dianjaya Steel, and Barata Indonesia. :contentReference[oaicite:3]{index=3}
Each company may operate with different technologies, products, supply chains, and sustainability priorities.
Therefore, climate-related disclosures should be developed according to the actual circumstances of each company rather than using a uniform approach for the entire industry.
Why Prepare Climate-Related Disclosures Based on ISSB Standards?
Companies in the iron and steel industry can obtain several benefits from preparing climate-related disclosures based on ISSB Standards.
1. Improve Transparency and Accountability
Clear sustainability and climate-related disclosure can improve transparency regarding greenhouse gas emissions, climate risks, environmental strategies, and corporate responses.
This transparency may help companies:
- Maintain investor and stakeholder confidence.
- Respond to sustainability information requirements.
- Improve communication regarding environmental performance.
2. Improve Climate Risk Management
Preparing disclosure based on ISSB Standards encourages companies to identify climate-related risks systematically.
These risks may include:
- Physical climate risks.
- Energy-price risks.
- Carbon-pricing risks.
- Technology-transition risks.
- Changes in environmental policy.
- Supply-chain disruptions.
- Changes in customer preferences.
3. Support Investor Decision-Making
Investors increasingly require information that helps them understand sustainability-related risks and opportunities that may affect financial prospects.
ISSB Standards provide a structured approach for presenting this information.
Clear disclosure can reduce information gaps between a company and its investors.
ISSB Standards and Climate Risk
Climate-related risk can generally be considered from both physical and transition perspectives.
Physical Risks
Physical risks may arise from extreme weather events or longer-term climate changes.
For steel companies, examples may include:
- Flooding affecting manufacturing facilities.
- Extreme rainfall disrupting logistics.
- Heat stress affecting employees and equipment.
- Water shortages affecting industrial processes.
Transition Risks
Transition risks arise from changes associated with the transition toward a lower-carbon economy.
Examples may include:
- Carbon pricing.
- New environmental regulations.
- Low-carbon technology requirements.
- Changing customer expectations.
- Investor pressure.
- International market requirements.
ISSB Standards and Climate Opportunities
Climate change does not create only risks. It can also create business opportunities.
Iron and steel companies may identify opportunities in areas such as:
- Energy-efficient production.
- Greater use of recycled steel.
- Renewable energy.
- Lower-carbon steel products.
- Improved material efficiency.
- Low-carbon infrastructure markets.
ISSB Standards can help companies communicate both climate-related risks and opportunities when they are relevant to business prospects.
Greenhouse Gas Inventory for ISSB Standards
A reliable greenhouse gas inventory can provide important information for climate-related disclosure.
Steel companies may need to understand Scope 1, Scope 2, and relevant Scope 3 greenhouse gas emissions.
Scope 1 may include direct emissions from fuel combustion and industrial processes.
Scope 2 generally relates to purchased electricity, steam, heat, or cooling.
Scope 3 may include relevant upstream and downstream value-chain emissions.
Reliable emissions data allows companies to establish a baseline and monitor progress over time.
Steps for Preparing Climate-Related Disclosures Based on ISSB Standards
The source article outlines four broad stages for preparing climate-related disclosure: initial assessment, report preparation, verification and validation, and publication and communication. :contentReference[oaicite:4]{index=4}
1. Initial Assessment
The first stage involves understanding the company’s current climate-related position.
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Identify Carbon Emissions:
Identify major greenhouse gas emission sources in company operations. -
Measure Emissions:
Use appropriate methodologies and data to calculate greenhouse gas emissions. -
Evaluate Climate Risks:
Identify climate-related risks that may affect operations or financial performance.
2. Prepare the Disclosure
The next stage involves collecting and analyzing the required information.
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Data Collection:
Collect relevant greenhouse gas, energy, climate-risk, and operational information. -
Data Analysis:
Analyze the information to understand climate-related impacts, risks, and opportunities. -
Disclosure Preparation:
Structure the information according to the relevant ISSB Standards requirements.
3. Review, Verification, and Validation
Companies should review climate-related data before publication.
The source article recommends internal audit and external verification as mechanisms that can help improve data reliability.
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Internal Review:
Check the accuracy, completeness, and consistency of data. -
External Verification:
Independent assurance or verification may be used where appropriate.
4. Publication and Communication
After preparation and review, climate-related information can be communicated through appropriate corporate reporting channels.
Companies should explain results, risks, strategies, metrics, and actions clearly to relevant stakeholders.
Data Required for ISSB Standards
Preparing climate-related disclosure can require information from multiple departments.
Relevant data may include:
- Greenhouse gas emissions.
- Energy consumption.
- Production volumes.
- Fuel consumption.
- Raw material use.
- Climate-related risks.
- Capital expenditure.
- Operating expenditure.
- Climate-related targets.
- Decarbonization initiatives.
Cross-functional collaboration is therefore important when applying ISSB Standards.
ISSB Standards and Energy Efficiency
Energy efficiency is particularly relevant for the iron and steel industry.
Companies can evaluate furnaces, motors, compressors, pumps, cooling systems, rolling operations, and other energy-intensive equipment.
Efficiency projects can potentially reduce energy consumption, greenhouse gas emissions, and operating costs.
Where material, these actions can also form part of the company’s climate-related strategy and disclosure.
ISSB Standards and Decarbonization
Climate disclosure should not be viewed only as a reporting exercise.
The information gathered for ISSB Standards can also support corporate decarbonization planning.
Potential strategies for steel companies may include:
- Improving energy efficiency.
- Using renewable electricity.
- Increasing scrap utilization.
- Improving heat recovery.
- Optimizing production processes.
- Reducing material losses.
- Evaluating lower-carbon technologies.
ISSB Standards and Investor Confidence
Investors need relevant information to evaluate how sustainability-related risks and opportunities may affect a company’s prospects.
Using ISSB Standards can provide a more consistent structure for that information.
This does not automatically guarantee additional investment or financing.
However, better disclosure can help investors make more informed decisions based on comparable and transparent information.
Benefits of Actia’s ISSB Standards Consulting Services
The source article identifies several potential benefits of using Actia to support climate-related disclosure preparation based on ISSB Standards. :contentReference[oaicite:5]{index=5}
1. Expertise and Experience
Actia can support companies in organizing climate-related information and developing a disclosure strategy.
Support may include:
- Developing an effective disclosure approach.
- Identifying climate-related risks.
- Organizing emissions and sustainability data.
- Supporting alignment with relevant standards and requirements.
2. Improve Internal Efficiency
Preparing sustainability and climate-related disclosure can require substantial coordination between finance, sustainability, operations, risk management, engineering, and management teams.
External assistance can help organize the process and reduce part of the technical burden on internal teams.
3. Strengthen Corporate Communication
Clear disclosure can help companies communicate climate-related performance more effectively to investors and stakeholders.
Transparent reporting can also strengthen the credibility of a company’s sustainability strategy when supported by reliable data.
ISSB Standards for the Future of the Iron and Steel Industry
ISSB Standards can provide an important framework for iron and steel companies seeking to improve climate-related financial disclosure.
The industry faces significant climate-related challenges because steelmaking can involve high energy consumption, carbon-intensive production processes, and complex supply chains.
At the same time, companies may identify opportunities through energy efficiency, recycling, renewable energy, low-carbon technology, and development of lower-carbon products.
Preparing climate-related disclosures allows companies to identify material risks and opportunities, collect relevant data, evaluate financial implications, establish metrics and targets, and communicate their strategy more transparently.
The process can also strengthen internal climate governance because information must be collected across different departments rather than managed solely by environmental teams.
Why Companies Should Prepare for ISSB Standards
ISSB Standards reflect the increasing importance of sustainability-related information in financial and investment decision-making.
For the iron and steel industry, preparing early can help companies improve climate data systems, establish reliable greenhouse gas inventories, identify climate risks, and develop more structured decarbonization strategies.
Companies can begin by conducting an initial assessment, identifying relevant emissions and risks, collecting reliable information, developing disclosure processes, reviewing data quality, and communicating results transparently.
Ultimately, ISSB Standards can help companies move beyond general sustainability statements toward more structured and decision-useful climate-related information.
For further information about consulting services for preparing climate-related disclosures based on ISSB Standards for the iron and steel sector, click here to discuss your requirements with Actia.