As consumers increasingly demand environmentally friendly products, this is putting pressure to create a sustainable fossil-free supply chain and on the entire steel making process, from mining to retailing.
Imagine two nearly identical products on a store shelf: one is produced more sustainably than the other. Hopefully, the choice would be to buy the environmentally friendly version. But would it still be the preferred option it if it was more expensive?
The demand for sustainable products is increasing rapidly around the world. According to Edelman Trust Barometer 2022, an annual global survey of more than 36,000 respondents in 28 countries1, 77 percent of people worry about climate change. Another recent survey2, made by Simon-Kutcher & Partners, found that 71 percent of global consumers are making changes to the way they live and the products they buy to live more sustainably.
“There is greater concern about the environment in wealthier countries,” says Fredrik N G Andersson, Associate Professor, Department of Economics at Lund University. “Much of this demand is influenced by social media and NGOs. A small group can have a large impact.”
At the same time, according to one of the above studies, even if growing numbers of consumers are willing to make changes in their lifestyles, only an average of 32 percent are willing to pay more for sustainable products and services.2 But change is happening, and it’s being driven by younger people, who are more likely to have their consumption driven by sustainable values, and they are willing to pay for it.
“Decarbonization is possible, but it requires new thinking,” says Andersson. “It requires a new society, but societies change all the time.”
Associate Professor Andersson also stresses that it’s important to clarify what is meant by ‘green’, ‘sustainable’ or ‘environmentally friendly’. Many consumers equate ‘green’ with a reduction in greenhouse gas emissions but products can affect the environment in many different ways. This can become even more complicated when “environmental accounting” is used to analyze the entire supply and production chain of a product.
“Emissions can vary drastically throughout the supply chain,” Andersson explains. “A lot of emissions result from producing basic materials like steel, chemicals or paper, because they are energy-intensive sectors. Transporting raw materials and products also causes a lot of emissions, and even how the product is managed or recycled at the end of its useful life can make an impact. Other parts of the supply chain might only produce a tiny amount of emissions.”
Increasingly there is pressure on the supply chain to be more environmentally friendly, and that pressure is being exerted at both ends of the chain.
“Decarbonization is possible, but it requires new thinking.”
Fredrik N G Andersson, Lund University
“Primary production companies like SSAB can have a huge impact on the climate, and they know it. You see them and similar firms working to improve their sustainability,” Andersson says. “At the other end, retailers are pushing for more environmentally friendly products and processes, because they feel pressure from the consumer.”
Large companies increasingly require proof that steps towards sustainability are being taken by everyone in their supply chains. This is now becoming a standard part of corporate sustainability reports and business decisions. Consumers are also paying closer attention. The vast majority of consumers are understandably wary of corporate greenwashing and prefer to see independent verification of claims.
SSAB is working with partners and customers to create a fossil-free value chain from the mine to the end product. While fossil-free steel will be more expensive compared to steel created by traditional methods, purpose-driven consumers are willing to pay more for products and services aligned with their values. Just as some people will pay more for a particular brand name, others will pay more for a brand that shares their values.
For SSAB, brand loyalty is built on customers knowing they can rely on products that deliver quality at the operational level, but also at an economic and business level. Now, and in the future, products will also need to deliver sustainability value. As the market leader in fossil-free steel, SSAB offers value-driven customers an environmental benefit to continue using its steel.
58 percent of global consumers say they buy or advocate for brands based on their beliefs and values.
Edelman Trust Barometer 20222
There are only a few industries as closely intertwined as steel and construction. For over a century, the two sectors have developed together, and now the future of that relationship is sustainability.
The interest in “green steel” is increasing. But when no official definition exists, how do you know if you’re a victim of greenwashing?