It may be a tough sell for its critics, but Algoma Steel Group Inc. is positioning to make itself more attractive to investors who put their money where their values are.
Earlier this month, the Sault steelmaker issued something it called an "ESG position statement," announcing it intends to issue its first "ESG report" at an undisclosed time in 2023.
ESG stands for environmental, social and governance.
The term was coined in an October 2005 report from the United Nations Environment Programme Initiative.
The steelmaker's announcement received little media notice, with few, if any, media outlets reporting any details from the seven-page position statement aside from what was said in a news release.
But Algoma's announcement is significant because ESG has become the gold standard used by many socially conscious investors to assess a business's performance on sustainability and ethical issues.
Numerous mutual funds, brokerages and robo-advisors sell ESG-based investment products.
The recent growth of these products has prompted businesses to increasingly emphasize their ESG performance when competing for capital.
It has also led to some organizations being accused of overstating their ESG achievements.
In recent months, Algoma Steel has been criticized for dangerously high levels of carcinogenic emissions and for lagging far behind other companies in accepting women into its boardroom and executive ranks.
"It is deeply concerning to see that despite the existence of regulations, the Algoma Steel mill has been allowed to operate in a manner that is harmful to the health and well-being of the people living in the local area," said a letter signed last month by 38 Algoma University faculty members.
Two years ago, SooToday revealed the Sault steelmaker was proposing to become a public company without a single woman on its board of directors or currently serving as an executive officer.
"The last company on the Standard and Poor's 500 with an all-male board was Monolithic Power Systems Inc., which finally added a female director a little over two months ago," SooToday reported.
Algoma has recently made significant advances on both these fronts.
It now counts three women on its 11-member board.
Last month, it announced a North Bay woman, Danielle Baker, had been appointed chief human resources officer.
Bain Capital, which held a seat on the Algoma Steel board from 2018 to 2021 as the steel producer emerged from insolvency protection, said it pushed for changes.
"Through our board participation, we advised and encouraged the initial stages of the company’s transformation to a more sustainable business model and production method, which we believe will meaningfully reduce its environmental impact," Bain said.
"Additionally, we appointed a female director as our successor on Algoma’s board when stepping down in 2021," it added.
As Algoma Steel released its ESG position statement last month, its chief executive officer, Michael Garcia, said: "Given the significance ESG plays in the global steel industry, Algoma is committed to ensuring that ESG factors are incorporated into our core strategic objectives to ensure that we are generating value for our investors, employees, local communities, and suppliers and prioritizing long-term sustainability.”
The following are selected excerpts from the company's ESG position statement.
The full statement can be found on this website.
Today, we are on a course of action, returning to our roots as a customer-focused company with the courage and growing capability to meet the industry’s challenges head on, including challenges related to environmental, social, and governance (ESG) factors, in order to deliver sustainable returns for investors.
Steel has infinite recyclability, and two-thirds of all manufactured goods contain steel. As one of the world’s most sustainable materials, steel has played an integral role in contributing to the modernization of the world. We recognize the critical role the steel industry plays and will continue to play in contributing to both environmental and social factors, with a particular focus on climate change.
Our company’s purpose, mission and values are interconnected with and reinforce our commitment and approach to ESG.
They demonstrate our commitment to conduct our operations in an environmentally responsible and innovative manner, protect the health and safety of our employees and contractors, foster a diverse, inclusive and equitable workforce, and generate long-term sustainable value for our stakeholders and investors, including our contributions to the communities in which we operate.
We want the benefits of our steel to endure for generations. With the future of our children and grandchildren in mind, we are transforming the way we produce steel.
We are adopting electric arc technology that builds on the strong principles of recycling and environmental stewardship to significantly lower carbon emissions. We are working safely as a team to become one of North America’s leading producers of green steel, drawing on the best of our rich steelmaking tradition to deliver greater value to our people, customers, investors, communities, and the world around us.
We aim to be a climate change leader and contribute towards a sustainable and environmentally responsible future for Canadian steel production.
To this end, we support the objectives of the Paris Agreement, and as a member of the Canadian Steel Producers Association (CSPA), we support the objectives of the association, including our shared aspirational goal to achieve net-zero CO2 emissions by 2050.
We partner with associations such as the Canadian Carbon Research Association to contribute towards research on decarbonization in the industry.
We are committed to embedding ESG practices into our business model, which include:
- complying with all applicable environmental laws and regulations
- assessing sustainability-related risks and capturing value-added opportunities
- actively supporting diversity, equity and inclusion
- aiming to provide a safe and healthy environment for all employees
- promoting a culture where all of Algoma’s employees share the foregoing commitments
In pursuit of our ESG commitments, we expect all employees of Algoma to uphold and recognize their accountabilities in driving our ESG framework.
We expect our leaders to provide visible and active leadership regarding ESG factors. Our board has ultimate accountability for ESG factors, including climate change factors.
The nominating and corporate governance committee has primary responsibility for supporting the board in this oversight responsibility and is responsible for overseeing Algoma’s ESG framework, coordinating with other board committees and reporting on ESG to the entire board.
Our CEO has the highest level of management responsibility for ESG factors, including climate change factors. Our CEO reports to the nominating and corporate governance committee of the board on ESG-related matters quarterly.
We are committed to maintaining our robust governance structures and further strengthening our governance to demonstrate leading ESG practices.