Climate Change Data

Environmental Metrics

ESG Focus Areas

• environmental issues
• matters relating to employees and society
• regard for human rights
• combating corruption and bribery

Environmental Achievements

• Energy savings of 100,000 MWh from August 2016 to August 2019 through the implementation of corresponding efficiency measures throughout the Group.
• New heat treatment line investment project at Ilsenburger Grobblech GmbH to refine 200,000 t of plate steel in energy-efficient processes from 2020, reducing exhaust heat loss and material transport.
• Introduction of special software to improve transparency and synergy exploitation in the Integrated Management System of Salzgitter Flachstahl GmbH.

Social Achievements

• Establishment of six values behind the Group mission statement “YOUNITED” through annual initiatives.
• Groupwide talent pool identification to enhance employer attractiveness.
• Systematic succession planning to guarantee necessary personnel resources.
• Measures and campaigns to reduce absenteeism rates through occupational health and safety initiatives.

Governance Achievements

• Implementation of a Code of Conduct emphasizing responsible actions, environmental protection, and sustainable management.
• Establishment of a CSR working group reporting directly to the Executive Board.
• Implementation of a Compliance Management System (CMS) to prevent, reveal, and penalize illegal conduct.

Climate Goals & Targets

Environmental Challenges

• Conflicts of interest between stakeholders.
• Balancing high environmental standards with economic viability and job preservation.
• Varying global perspectives on CSR topics.
• Need for global frameworks to address issues like climate protection and human rights.
• Achieving significant CO2 emission reductions in steel production due to technological limitations.

Mitigation Strategies

• Prioritizing competitiveness and profitability to ensure sustainable and responsible CSR actions.
• Cultural tolerance in international operations.
• Focusing on internal performance while acknowledging the importance of a reliable social framework.
• Implementing a Code of Conduct based on UN Global Compact principles.
• Establishing a CSR working group and incorporating CSR targets into manager remuneration.
• SALCOS® project to gradually transform to hydrogen- and electricity-based steel production.

Supply Chain Management

Responsible Procurement

• Long-term partnerships with key suppliers, standardized supplier evaluation, sustainability questionnaire based on automotive industry self-disclosure form.

Climate-Related Risks & Opportunities

Transition Risks

• Increased operating costs and jeopardized competitiveness due to SALCOS® implementation.

Opportunities

• Development of energy-efficient products and processes, SALCOS® project.

Reporting Standards

Frameworks Used: German Sustainability Code (DNK)

Certifications: DIN EN ISO 14001 (environment) and DIN EN ISO 50001 (energy) at company level

Third-party Assurance: KPMG AG (limited assurance)

Sustainable Products & Innovation

• StronSal® coating, K-Tower for wind farms, Innofill PET NV filling system, improved petrol injection lines.

Awards & Recognition

• CDP’s “Best Newcomer Germany” (2016), CDP “A-” rating (2018), “Germany’s Best Trainer” and “Germany’s Best Training Companies” (2018).

Environmental Metrics

ESG Focus Areas

• Climate Change
• Decarbonization of steel production

Environmental Achievements

• Developed benchmark solutions for avoiding CO2 emissions in the steel industry (SALCOS® project)
• Realized the first industrial cross-sector combining of renewable energy, hydrogen production, and industrial consumption at a single location in Germany
• Installed the world’s currently largest high-temperature electrolyzer
• Producing green strip steel in Peine mini mill with a CO2 footprint around one quarter of that of steel products from the iron-ore based route

Social Achievements

• Introduced short-time work to cushion the economic impact of the Corona pandemic and to secure liquidity
• Continued to pay remuneration to core workforce and temporary workers at KHS site in India during national lockdown
• Several hundred managers, including members of the Executive Board, the Group Management Board and the Supervisory Board waived parts of their salary

Governance Achievements

• Submitted Declaration of Conformity with the recommendations of the German Corporate Governance Code (with exceptions noted in the report)
• Developed a mission statement (“YOUNITED”) defining shared values including reliability, fairness, and sustainability
• Defined a Code of Conduct for all Group’s employees

Climate Goals & Targets

Environmental Challenges

• Significant additional challenges due to the coronavirus pandemic, including a collapse in production capacity utilization (up to 70% in some cases)
• Slumps in demand from key customer sectors like the automotive industry
• Fierce competition in the steel market, including low-priced imports

Mitigation Strategies

• Introduced short-time work
• Voluntarily reduced salaries for managers and board members
• Rigorous cost and liquidity management
• Shelved non-essential investments
• Hedging of defined iron ore and coking coal volumes
• Implementation of the “FitStructure SZAG” efficiency program

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• EU emission trading scheme
• Increased climate targets

Opportunities

• SALCOS® project
• Green steel production

Reporting Standards

Frameworks Used: DNK (Deutscher Nachhaltigkeitskodex)

Third-party Assurance: Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft; KPMG AG Wirtschaftsprüfungsgesellschaft (for non-financial report)

Sustainable Products & Innovation

• Green strip steel

Environmental Metrics

ESG Focus Areas

• environmental issues
• matters relating to employees and society
• regard for human rights
• combating corruption and bribery

Environmental Achievements

• Reached the target of SZAG’s energy efficiency network to save 100,000 MWh of energy across the Group in the period from August 2016 to August 2019.
• Commissioned the heat treatment line in spring 2021, resulting in energy efficient processes for 200,000 tons of plate steel.
• Salzgitter Flachstahl GmbH (SZFG) was the first European steel manufacturer to receive conformity statements for its new green steel products in accordance with TÜV SÜD’s VERIsteel standard, achieving a reduction of more than 75% in the carbon footprint for slabs and more than 66% in that of hot-dip galvanized coils.
• Cumulative reduction in Scope 1 and Scope 2 emissions of 207 kt CO2 as a direct consequence of efficiency measures.

Social Achievements

• Successfully completed the YOUNITED 2.0 initiative in 2021, focusing on quality.
• Implemented programs for managing talent and succession planning on schedule in 2021.
• Expanded further education activities, increasing both the number of participants and the number of further education measures attended.
• Introduced a digital Learning Management System (LMS) at KHS GmbH.

Governance Achievements

• Implemented a concept to harmonize and optimize the processes in transferring the employer’s obligations regarding industrial health and safety at work and environmental protection for managers.
• No significant fines or monetary sanctions were imposed on Group companies in 2021 due to failure to observe laws or regulations.
• Regular compliance training for employees on the subjects of criminal law governing corruption, antitrust law and the law on money laundering.

Climate Goals & Targets

Environmental Challenges

• Imminent lack of skilled workers.
• Extension of working life.
• Changed demands of employees for a work-life balance.
• Increased age of workforce due to demographic change.
• The greatest challenge for the Group in connection with emissions affecting the climate is the fact that carbon emissions stemming from technologies for the ore-based production of primary steel used today on an international scale and in the Salzgitter Group have nearly reached their minimum possible level within the process boundaries set by laws of nature.

Mitigation Strategies

• Intensifying efforts to be perceived as an attractive employer in the competition for skilled workers.
• Launched the group-wide project “GO – The Generation Offensive 2025” to manage the diverse challenges.
• Developed a new employer campaign.
• Introduced a group-wide discount portal for employees.
• SALCOS® program (SAlzgitter Low CO2 Steelmaking) to reduce CO2 emissions.

Supply Chain Management

Responsible Procurement

• Long-term partnerships with key suppliers
• Sustainability survey sent to major long-term suppliers

Climate-Related Risks & Opportunities

Opportunities

• SALCOS® program

Reporting Standards

Frameworks Used: German Sustainability Code (DNK), Greenhouse Gas Protocol Corporate Standard

Certifications: DIN EN ISO 14001, DIN EN ISO 50001

Third-party Assurance: KPMG AG

Sustainable Products & Innovation

• Green strip steel products
• Low CO2 steel
• Resource-efficient StronSal® coating
• Innofill Glass DRS ECO generation of fillers
• Environmentally friendly paper wrapper

Awards & Recognition

• 19th MATERIALICA Design + Technology Award

Environmental Metrics

ESG Focus Areas

• Climate change
• Circular economy
• Green steel production

Environmental Achievements

• Continued construction of the first SALCOS stage (transformation to green steel production)
• Consumed 255,000 MWh of green electricity, resulting in CO2 savings of over 150,000 tons of CO2e.
• Implemented 296 individual energy efficiency measures, resulting in 224,000 metric tons CO2e savings.

Social Achievements

• Not disclosed

Governance Achievements

• Established a new ESG organizational structure in 2022.
• 30% of Executive Board variable remuneration linked to non-financial targets (including sustainability).

Climate Goals & Targets

Environmental Challenges

• Insufficient free allocation of CO2 allowances under the EU ETS, leading to increased direct costs.
• High investment costs (2.2-2.4 billion euros) for the transition to low-carbon steel production.
• Supply chain disruptions due to potential flooding of coking coal mines in Australia.

Mitigation Strategies

• Precautionary purchases of CO2 allowances.
• Development of the SALCOS program for low-CO2 steelmaking.
• Reduced reliance on Australian coking coal and increased stockpiling before the rainy season.

Supply Chain Management

Supplier Audits: As needed

Responsible Procurement

• Code of conduct
• Environmental certificates
• Osapiens risk analysis tool
• SAP integration for CO2 footprint tracking.

Climate-Related Risks & Opportunities

Physical Risks

• Flooding of coking coal mines

Transition Risks

• Rising CO2 allowance prices
• High investment costs for green steel production
• Regulatory changes

Opportunities

• Increased demand for green steel
• Price premiums for low-carbon products
• New revenue streams from renewable energy sector.

Reporting Standards

Frameworks Used: GRI, SBTi

Certifications: ISO 14001, ISO 50001

Third-party Assurance: EY (limited assurance)

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 9 (Industry, Innovation and Infrastructure)
• Goal 13 (Climate Action)

Initiatives contribute to these goals through green steel production, renewable energy usage, and emissions reduction.

Sustainable Products & Innovation

• Green steel (SALCOS)
• Long steel products from 100% scrap steel (Peiner Träger GmbH).

Awards & Recognition

• Not disclosed