3 questions to... Christophe Hadjal

27/09/2022

Fresh from signing the Sustainable Steel Principles (SSP) in New York, Christophe Hadjal, Head of Advisory & Business Development – Natural Resources, Mining, Metals & Industries at Societe Generale, shares an update on the decarbonisation of steel and the shift of Mining, Metals and Industries finance.


Christophe, why do we need to decarbonise Steel?

Steel is ubiquitous. It’s used for the buildings we live and work in, the domestic appliances we use to keep our food fresh or to wash our clothes, and the transport we use to travel. It’s an absolute necessity. Yet, due to today’s steel production depending largely on coal, it accounts for 7% of all CO2 emissions and is therefore a major contributor to global warming. It’s imperative that we speed up our transition towards a more sustainable means of steel production to reduce these CO2 levels as we collectively work towards being net zero. 


Can we really make steel more sustainable?

The good news is that new technologies are already being implemented, and low carbon steel can now be produced more sustainably. This is what we are already doing with some of our clients. The challenge now is to massively industrialise the scale, and this fundamentally is what’s behind the Sustainable STEEL Principles (SSPs) we recently launched. The SSPs are the result of a year-long consultation period, where Societe Generale co-lead a working group of the metals and mining teams of five banks. This was facilitated by RMI, who we partnered with for Principles linked to the decarbonisation of Aluminium, Aviation and Shipping, enabling us to leverage best practice. The culmination of this working group enabled us to design together a common measurement framework to support the steel industry towards net-zero carbon emissions. 

The Sustainable STEEL Principles is composed of five pillars: 
1. Standardized assessment – to annually measure the climate alignment of our steel portfolio according to a common guidance and methodology 
2. Transparent reporting – to publicly acknowledge participation to the Sustainable Steel Principles and disclose progress annually in term of climate alignment 
3. Enactment – to source climate data first from Borrowers, and otherwise from a reliable third-party data provider  
4. Engagement – to engage with clients on net-zero transition plans, available financial products, and expectations for emissions reductions  
5. Leadership – to utilize the framework for advocacy, in the interest of the decarbonization of the steel industry

As more banks join the initiative, the SSPs are designed to provide a practical framework to achieve our NZBA* objectives in the steel sector.


Our Metals and Mining Industries business shifted its business model to span value chains and to drive the ESG agenda. What role does steel play in this shift?

Our role is to accompany our clients as we embark together on an ambitious decarbonisation journey. In the steel sector, as for our other Mining, Metal and Industrial clients, our ‘shift’ means that we support emerging leaders as they grow and we also work with our existing clients as they implement their transition strategy. We do this through financing of course, but equally through the advisory solutions we bring. The steel value chain is a perfect illustration of this dual approach: on the one hand, we advise H2 Green Steel for example, an innovative low carbon venture and emerging leader, and on the other hand, we structure sustainability-linked loans with decarbonisation KPIs with well-established corporates. 


*Societe Generale is a founding member of the Net Zero Banking Alliance.

 

Christophe Hadjal Head of Advisory and Business Development - Mining, Metals and Industries Finance Societe Generale