Sustained economic value creation and distribution is possible when companies innovate and remain competitive in the market. The economic value created by a company changes over time due to technological innovations and improvements in efficiency.
Traditionally, the focus of economic value was on the creation of shareholder value, an approach that changed in the 1990s, when it was observed, that value creation was in the service of several actors including customers, employees, society as a whole and the shareholders. Thus, the notion of “creating value for stakeholders” emerged (Touati 2013).
In the context of sustainability, companies create economic value, which is captured by stakeholders in various forms. The economic value generated by companies can be distributed to stakeholders and re-invested in the firm.
The steel industry is an important generator of wealth & value in society and distributes the majority of this to a wide range of stakeholders. The remainder is re-invested in the company to promote long-term growth and innovation.
Investments in modern and advance technologies enable significant improvements in production efficiency, resource use and cost reductions. Companies have to regularly upgrade their physical assets or acquire new ones to remain competitive. The development of the strip casting technology has several advantages over conventional casting. This technology breakthrough was possible because of the strong focus on research and development programs and investments that allowed thinner casting.
The steel industry invests much time and resources in developing leaner and cleaner operations and products, especially in terms of energy use and pollution prevention.
Several member companies have their own research centres, while others work together with universities and research institutes.
The investment in new processes and products indicator measures the value of investments made on capital expenditure, and research and development expressed as a percentage of revenue.
We have many challenges to overcome as a global society. We are faced with resource shortages, water and land stress, environmental degradation and climate change. There are also many needs to be met – from poverty eradication to mitigation of natural disasters. The challenges are magnified by a population set to grow from the present to 9.7 billion by 2050, accompanied by rapid urbanisation.
It is clear that things cannot go on as they have, and that we must transition to a green economy in which economic growth and environmental and social responsibility work hand in hand.
The steel industry believes that sustainable development must meet the needs of the present without compromising the ability of future generations to meet their own needs. Within this, a green economy delivers prosperity for all nations, wealthy and poor alike, while preserving and enhancing the planet’s resources.
The transition to a green economy is already underway and presents countless opportunities for positive change. Steel has an essential role to play in this transition and in sustaining a green economy. Steel is critical to the sectors and technologies that will enable and drive a green economy. Renewable energy, resource and energy efficient buildings, low-carbon transport, infrastructure for fuel efficient and clean energy vehicles, and recycling facilities all depend on steel.
Today, steel is one of the most common materials in the world. We rely on it for our housing, transport, food and water supply, energy production, tools and healthcare. Nearly everything around us is either made of steel or manufactured by equipment made of steel.
Steel stocks range from 0.1 tonnes per person for the poorest nations to over 13 tonnes per person for Japan, with the world average at around 2.7 tonnes per person.
Steel stocks per person, or the demand for steel in developed societies tends to plateau as a certain level of wealth is reached and the need for new infrastructure and buildings are satisfied. Per capita demand tends to remain high in areas with high industrial production, contributing to sustained economic growth.
For example, steel demand is high in South Korea due to the country’s high level of steel exports in steel-containing goods such as ships and cars. It is also high in Japan because of shipbuilding, engineering and automotive – it remains a big net exporter of automotive vehicles. Steel is also required in both of these highly urbanised countries for highrise buildings that are earthquake resistant.
Stock levels for steel in China and India in particular are expected to grow significantly by 2050 to meet their growing need for buildings, infrastructure and transport in a sustainable way. There will also be strong growth in steel production in other areas of the world where steel will be vital in raising the material and social welfare of developing societies.
Developing societies require steel to build new roads, railway lines, buildings and bridges. They also need it to lay new pipelines for gas, water and sanitation and to build factories and machinery.
Once basic infrastructure needs are met and GDP continues to rise, the demand for consumer goods such as washing machines and refrigerators increases, as does the need for mobility via trains, buses and automobiles – all of which require steel for their production and related infrastructure (stations and fueling). Urbanisation is also enabled by steel – e.g. allowing for high-rise buildings.