Sustainability has high priority in the metals industry

“Sustainability” is a word that’s used a lot these days. But what exactly is sustainability and how does it relate to the metals industry? In this blog post, we attempt to define sustainability and take a look at some of the key issues the metals industry is facing, while identifying some possible solutions.

Background

Native metals appear to have captivated human beings right from the beginning and, if we jump forward to today, the consumption of metal shows no sign of slowing down. It can be expected that, for most metals, there will continue to be rising levels of demand and production, as there are no indications of saturation on the demand side or scarcity on the supply side. With regard to a sustainable metals industry, these growth rates pose the most significant challenges when it comes to resource protection and the associated ecological burdens.

What exactly is sustainability? 

There are three widely accepted pillars of corporate sustainability – social, environmental and economic, also known as people, planet and profits. In short, sustainability is most frequently described as: meeting the needs of the present generation without hindering the ability of future generations to meet theirs.

• Pillar 1: Social – People

A sustainable enterprise should have the loyalty and backing of its employees, stakeholders and the community it conducts its operations in. This means treating staff fairly and being a conscientious member of society on both a local and a global level. 

• Pillar 2: Environmental – Planet 

Environmental sustainability is defined as responsible interaction with the environment to prevent exhaustion or degradation of natural resources and to allow for long-term environmental quality. This includes initiatives such as reducing carbon footprints, packaging waste, water usage, or other hazards to the environment.

• Pillar 3: Economic – Profits

In order to be sustainable, a business must turn a profit. Areas covered by the economic pillar include compliance, proper governance, and risk management. 

Current sustainability deficits in the metals industry

Issues can be found in all three areas of sustainability to varying degrees. As part of a company’s strategy, evaluating the problems and focusing on those which have particularly far-reaching consequences is recommended.

Social: This includes failings connected with resource exploitation in ecologically and especially socially and culturally sensitive areas. Problems associated with occupational health and safety in metal production and processing in industrialised nations also contribute to deficiencies in social sustainability. 

Environmental: The most pressing deficit relating to environmental sustainability is the situation in many mines. Large-scale opencast mining has a detrimental impact on local ecosystems. There are also wastewater flows, as well as emissions along the metal production chain with ecotoxicological consequences, especially regarding heavy metals, which have the potential to cause acid rain and contribute to the greenhouse effect.

Economic: The ability to be innovative is one of the basic requirements when it comes to transforming economic interests into sustainable activities. However, when examining the global supply chain, lack of innovation in the industrialised nations is relatively inconsequential when compared with the situation in the newly industrialising countries, which is where most of the raw materials processed in the industrialised countries come from.

Achieving sustainability in the metals industry:

A sustainable metals industry is largely based on:

• A closed loop of metals which has, ideally, no quantity or quality losses
• Stabilising and increasing the quality of metals in the technosphere
• Optimising the treatment of metals, particularly in product design and utilisation
• Minimising contamination by using high-quality recycling
• Not exceeding the carrying capacity of local and global ecosystems with air, water, and soil emissions
• Avoiding the build-up of heavy metals and other toxic materials in the earth
• Eliminating hazards and unacceptable risks to human health as a result of man-made effects

Recycling metals as a solution

Significantly better sustainable management of metals can be accomplished by boosting resource productivity and by stretching resource consumption – and metal recycling offers excellent conditions for this. It has always been simpler to re-use old metal than to arduously extract new metal from ore. Therefore, high-quality metal recycling is the solution to a whole range of sustainability problems, not just in connection with the availability of resources, but also with regard to the environmental and socio-economic problems which are intrinsically linked with primary metal production. 

Recycling is certainly considered to be key to a sustainable metals industry by leading experts in the US. As Charles Johnson, President and Chief Executive Officer of the Aluminum Association, points out: “The US aluminum industry has recently drastically increased its rate of recycling and the recycled content in its products and is continuing to do so.” Johnson also noted that the US recycling rate in the building and construction market is over 90%, which, he said, is also the case in the automotive industry, which has recently begun to accelerate its push to be more sustainable. But companies need to be willing to invest money into achieving their goals: “We have seen $4 billion in investments in recycling technologies over the past 10 years, including $800 million over the last six months.” 

Investment in sustainability is on the rise

Sustainable investing does not mean that your business has to forego its profits. Sustainable investing – also known as ESG investing (environmental, social, and corporate governance) – is becoming increasingly popular, largely due to demand from customers and investors who would rather invest in companies with core values that drive positive change. 

In 2020, 14 out of 17 ESG-focused exchange-traded funds (ETFs) outperformed the S&P 500 from January to May. According to Morningstar Inc., flows into sustainable investment funds in the US in 2020 reached $51.1 billion, which was more than double that of 2019 levels and a nearly 10-fold increase on flows into ESG funds in 2018.