“There is a growing crescendo calling for one way to measure emissions”

Think.steel: Mrs. Heaton, you hold a combined honours degree in PPE, politics, philosophy and economics. Before you became Head of ResponsibleSteel, you were a chair of the World Steel Association’s sustainability group. What was it about the steel world that pulled you in?

Heaton: I’ve been in the steel industry for nine years before I joined ResponsibleSteel. I was working for ArcelorMittal on sustainability. Before that I was in the wind industry for eight years. And before that, my career was really in international development, so more of an emphasis on the social side. So, my career has really encompassed all aspects of sustainability. For me it’s always been sustainability first, no matter the industry I was working in. And that reflects my degree very much – the link between policy and economics. And in today’s world, it’s vital to link economics to sustainable development

Think.steel: How are you now applying this enthusiasm for sustainability and the components of your degree at ResponsibleSteel?

Heaton: There is nowhere I could have done this better than in an area that is making the transition to near zero. Carbon pricing is vital to what I just outlined. And since you don’t have carbon prices everywhere, you need some form of carbon border adjustments between markets. We have to build an industry where high emitting steel actually costs you more to buy than lower emitting steel. Of course that is economics, but it’s also policy because policy exists to make the impossible possible and at the moment very low carbon steel without any support is not possible economically. So, we need that policy to support it across the world.

Think.steel: Do you at ResponsibleSteel work with governments to help them develop new policies to further the cause of a near zero steel industry?

Heaton: We don’t work specifically or individually with governments. We do share our thinking on international standards with governments and through multilateral government forums, such as the World Trade Organization, the International Energy Agency, the Climate Club and so on. But we are certainly not in any activity of lobbying at all.

Think.steel: Do you publish anything for governments to see?

Heaton: Yes, what you see from us from time to time are Thought Leadership Pieces around how we see the world, how we see the steel industry and how we see the challenge of decarbonisation and its solutions. We need to make sure that it’s no longer viable to be producing high emitting steel in the years to come. And the timing of that is what politicians will decide. The decisions that they make will really shape the speed with which this transition happens.

Think.steel: And ResponsibleSteel supports this by its global steel standard, which you mentioned briefly. Can you tell us something about the standard?

Heaton: Our standard covers the full scope of the 17 Sustainable Development Goals set by the United Nations. So it spans everything from pollution and health to climate action and greenhouse gases to responsible production and responsible sourcing to partnership aspects and of course the justice element. We have ONE international production standard that covers thirteen principles. And of these, one principle is on climate change and greenhouse gas emissions.

Think.steel: You recently certified the first steel side, Big River Steel, at the product level, allowing them to market and sell Certified Steel.

Heaton: What Big River Steel has achieved is a global first. It’s the first time, steel is available on the market that has been certified as being produced in line with a universal comparable global benchmark for responsible steel production. The really significant aspect of this is that Certified Steel can now be promoted and traded. That means that there is now a market for Certified Steel, steel that can show comparable progress towards responsible near zero steel. Most people call it ”green steel”, I would rather talk about responsible near zero steel. That is our ultimate goal – since we cannot get to near zero emissions on the greenhouse gas side and pay no attention to the social side, pay no attention to water, pay no attention to pollution.

Think.steel: So Big River Steel changed their steel making processes on more fronts than on the decarbonisation?

Heaton: Our standard spans four levels. Big River have not only been certified against all our core requirements (the foundation level of certification) including all the aspects we just talked about, they have gone on to the next level, demonstrating progress on two fronts, decarbonisation and responsible sourcing. That is what enables them to market their steel as Certified Steel. They have made a first significant step towards net zero steel, and they are now tracing their supply chain on the same issues that they themselves have been certified against.

Think.steel: So a sustainable supply chain is the next step in responsible steel making?

Heaton: When we talk about decarbonisation, that needs to include the entire steel value chain which is going to change it quite considerably. We have the tremendous opportunity to ensure that value chain is built in a responsible way.

Think.steel: Can you tell us more about Progress Level 1, the decarbonisation part of it all?

Heaton: We’re not talking about near zero steel just yet. Our Decarbonisation Progress Level 1 takes the average of the industry’s embodied carbon emissions today as a starting point and says, you’ve got to be better than average. Half of the industry is above the global average. But, to get back to 1.5C, we need to get the entire industry below that level at the very minimum by 2030 and many to be far beyond that. Big River Steel is the first site in the world to put our fight against carbon emissions in the steel industry on a global map against this global benchmarking mechanism. As more follow suit and customers line up to buy this Certified Steel, we’ll start to see the market opening up, identifying steel making different levels of Decarbonisation Progress. Steel is one of the most traded global commodities – 25-30% of steel is traded over international boundaries. That is why, with global definitions of what ‘average’ ‘good’ and ‘better’ looks like, steelmakers and their customers can all measure progress consistently. and trade it on the same basis. And then governments can decide how to use this in regulation to drive the transition.

Think.steel: And what exactly is it telling the world?

Heaton: Big River Steel has said to the entire world: these are our embodied carbon emissions. 1.3 tonnes of CO₂ per tonne of steel, with a circularity rate of 57.3 % (this means 57 % of the input is scrap, and only 43 % primary iron metallics are being used). And for that scrap rate, they have shown themselves to be well below the average global emissions. And they have put themselves on the map, using the methodology that ResponsibleSteel developed over three years with multiple stakeholders from the industry, from customers and from civil society. We have seen a very similar approach being echoed in many other standards and frameworks that have followed since.

Think.steel: For example, LESS.

Heaton: Yes, one of them is the German LESS system. We have also seen similar approaches used in other parts of the world, like China. The important part about the ResponsibleSteel standard is that it is a standard and a system designed for global decarbonisation. It answers the question, how do you make decarbonisation effective, not just in your country or in your region but across the world?

Think.steel: Do you think there is going to be a competition between national and international standards?

Heaton: If you look at other voluntary standards you will see that there is always at least some competition. Usually, you end up with one maybe two global systems. For fairtrade food you have Rainforest Alliance or Fairtrade International for example. Fair trade is not regulated – it is a voluntary scheme. But in the steel industry, we will need regulation to drive decarbonisation because it is so uneconomical at present. We need governments to decide where to channel incentives and customers to understand, who is producing steel responsibly?

Think.steel: And you are offering a first step in that direction?

Heaton: Of course, every government wants to design their own policies – you have seen that in the Better Clean Initiative in the US for example and no doubt you will see the same in Europe. But there is also a growing crescendo calling for a single way to measure emissions Now when India, China, Brazil, South Africa, all develop their own regulations, then how do you trade between those states? You need to make sure that the measurement of embodied emissions is the same set of rules. We want to minimize the number of systems if we can and importantly to make them interoperable – for example so that regulators will be able to say that steel certified under the German scheme will be equivalent to the ResponsibleSteel scheme in this way or that.

Think.steel: If you are looking at the steel industry globally, that will be a difficult task. As you said before, the industry is very varied. Why would they follow a standard that is not set up for a country’s specific needs?

Heaton: Companies will follow at standard if they get value out of it, which will come via credibility with their customers in trade and offtake agreements. If you look at the Chinese Steel Association or the German Steel Association, for example, they have each developed their own standards because they understand that you can’t just market steel as “Green Steel”. But both are incredibly similar to the global ResponsibleSteel because they both have a global outlook. They know they need to compete on both on scrap-based steel and iron ore-based steel. That is something that other countries will have to understand as well, so that we can come to a common understanding of what good steel looks like.

Think.steel: So ResponsibleSteel is internationally structured as well?

Heaton: We have members in every continent across the world with members in Australia, Korea, Brazil, Europe, the US, Canada. Our Innovation Director lives in Canada. Our Standards Manager lives in Switzerland. I live in the UK. So, we are truly international. But we are only the secretariat, the executive. The governance of the system is very carefully designed to achieve balance between business and civil society and our directors live in four different continents.

Think.steel: And of course there are outside voices helping.

Heaton: Yes there are independent voices that give us the expertise and guidance we need. Any decision made by the board must be balanced between the voices from business and those from civil society. And to approve the standard we put it out there for a vote amongst our members. The vote must have a majority within the business caucus and within the Civil Society caucus. When our standard went through the voting process in 2022, we had well over 90 % approval rating from both civil society and business.

Think.steel: So part of your job is to find common ground on the social, the economical and the business side and additional to that you have to communicate globally.

Heaton: I think the other thing that a standard does is provide a common language in which we can speak about policy or about customer off takes for example. If you have an international standard, then you have an international language. I tend to think of it as a currency. You may have a claim about green steel from one steelmaker in one country trying to trade with a customer in another country. If the customer doesn’t know the standard they are certified with, they cannot trust the steelmaker. You really need the standard to be international, particularly for steel. ResponsibleSteel delivering that for our industry is quite a new concept.

Think.steel: The push for Green Steel is also quite a new concept. If you look at steel’s entire history.

Heaton: Exactly. The push for decarbonization has really only been in the last 10 years or so since the Paris Agreement. But of course, only in the last five years has it become a serious issue. The idea of having a voluntary standard is again something even newer. But when those steelmakers that really want to do this well, look around at the options, they will see that the credible way to do it is not to invent the standard yourself. You must listen to what stakeholders want and look at a standard that is being independently developed by a third party and certified by a third party.

Think.steel: And that entails every step on the value chain we have talked about before.

Heaton: So, if you are an automotive company and at some stage in the future you claim that your vehicles are made with ResponsibleSteel Certified Steel, people will know that this claim has been assured all the way through the value chain. That makes your claim even more valuable. It is a sophisticated system. It is not just about setting up a standard, setting up a definition. It is about all those elements being built credibly.

Think.steel: If you had to define the mission of ResponsibleSteel, what would you say?

Heaton: The mission is to drive the production of environmentally and socially responsible near-zero steel across the globe. How do we do that? We develop standards. Through a broad multi-stakeholder consensus. And we provide a forum for all stakeholders to discuss the difficult issues. At the moment we have a working group on high alloy and stainless steel. We are just about to start another working group on just transition. We know the transition to responsible steel is going to involve enormous social shifts. What is the relevant standard in ensuring the best possible practice there?

Think.steel: Is your work in that area linked to the World Steel Association?

Heaton: Just last year we joined as a member of the World Steel Association. World steel does excellent work across the industry on sustainability issues. But I think there was a clear gap in what they were doing and what the market wanted to see – customers and investors – wanted to see. They wanted to see a consistent and credible way of appreciating what good sustainability looks like across the industry, and that means involving more than just the industry. I know that the situation in Germany is very challenging. But in fact the decarbonisation challenge picture is challenging globally. If the first movers can get a healthy cost value balance shaped up through policy, they will really see and advantage. It’s very impressive to see the energy that the German government has been working with to try to create this work. So, I really look forward to developments not only in German industry, but in German policy and the international agreements they foster. We are ready to support them on this mission.

Think.steel: Thank you, Mrs. Heaton.

Annie Heaton graduated with a bachelor’s degree in Politics, Philosophy and Economics from the University of Oxford. Mrs. Heaton has dedicated over three decades to working in sustainability and corporate responsibility, with a particular focus on climate strategy, finance, reporting and social impact. She has led ResponsibleSteel since joining as CEO in 2022, overseeing ResponsibleSteel’s standards and certification programme as well as partnerships on initiatives including SteelZero, the Near Zero Steel 2030 Challenge, the Steel Standards Principles, and the Steel Breakthrough Agenda. Prior to this, she spent nine years shaping ArcelorMittal’s sustainability agenda, leading on stakeholder engagement, reporting, and investor relations. She also worked with global renewable energy firm RES Group in their zero emissions head office, establishing their environmental education programme and initiating their sustainability programme as the company developed large- and small-scale wind, solar and biomass projects.