Interview: ‘Sustainability is a guiding principle for today’s buyers’ - Camilla Kaplin, Outokumpu
Image credit: Nick Smith
Steel manufacturer Outokumpu’s senior manager of Environment, Camilla Kaplin, explains why sustainability in the ‘green transition’ is a vital factor in the supply chain.
What the term ‘green steel’ means depends on who you talk to, says Camilla Kaplin. This is because the phrase can be taken to mean any product that is, “more sustainable than it used to be”. For the senior manager of Environment at Finnish steel manufacturer Outokumpu – the largest steel producer in Europe, second in the Americas – this approach to defining sustainability credentials for the metal is too vague. She prefers to talk in terms of the ISO14040 environmental management standard to “clarify the situation”, specifically with reference to assessing CO2 emissions associated with products and raw materials.
“We have companies saying that from an environmental or climate perspective, their steel today is ‘better’ than what they had before. But because I work with these issues, I know that what you are allowed to call green steel is becoming more and more regulated and that it must fulfil a certain standard.” It follows that if the data reported on the three measures or ‘scopes’ outlined in ISO14040 that create a true picture of the steel’s carbon footprint aren’t presenting a sustainable product, “it’s not enough just to say that your steel is ‘better than it was before’. Many companies say that what they are producing today is better than they used to do it, better than their competitors and so on. But authorities want to regulate what you can call ‘green’ because otherwise it’s just a jungle of corporate claims.”
Kaplin says sustainability “is becoming a guiding principle for today’s buyers. It’s particularly important in the automotive and white goods sectors, where consumers are increasingly willing to pay a premium for environmental credentials. It is also a growing force in architecture, infrastructure and manufacturing industries.” But it hasn’t always been the case, because in the 20th century, when steel was the currency for building infrastructure, cities and creating military supremacy, “nobody cared about anything but the economics of steel”. Yet by the end of the century there was the recognition that steel manufacturing was a significant environmental pollutant. “Now we are getting a step further. It’s no longer just the dust and the water that comes out of the plant that are causes for concern: now we must also make sure that the carbon footprint of the whole chain is sustainable.” This is because, “the big focus today is on climate change”.
The three scopes in the life cycle assessment standard firstly cover direct emissions from a producer’s own operations. For stainless steel, that could include burning of fossil fuels. The second assesses indirect emissions such as those created by electricity generation. Third – and “the most challenging”, according to Kaplin – covers emissions that arise from supplied raw materials. “For stainless steel, it might cover mining and production of the ferronickel, which is used to make stainless steel, as well as the sourcing and transport of recycled scrap.”
Kaplin says that this is where care is needed, as “not all stainless steel producers provide data under scope 3. The fact that raw materials, or scope 3 emissions, can account for up to two-thirds of the footprint of stainless steel only highlights the importance of knowing what you are comparing.” The most reliable sources for data on CO2 emissions are Environmental Product Declarations (EPDs). These are created based on life-cycle assessment according to ISO 14040 and must be verified by a third-party auditor. Taking all three scopes into account, Kaplin says that Outokumpu’s CO2 footprint “is the lowest in the industry”.
EPDs create transparency, which in turn builds trust, says Kaplin, providing an objective measure to counter accusations of greenwashing. “It is the opportunity to declare ‘this is what we are saying, and this is what we are basing it on’. There are different perceptions of what green steel is, so this is a way of being open about what we are achieving.”
The problem for Kaplin is that “we have seen that standards such as the standard for Environmental Product Declaration are not very strict. There is a certain degree of freedom: you can choose between various options, especially when it comes to how you treat recycled materials and how you allocate difference burdens. Unfortunately, that has meant that even though you have different EPDs that are third-party verified, if they are from different programme operators, they can have slightly different methodologies or use different databases. Which means they are not as comparable as the intention was when the standard was written.” This area of ambiguity is open to exploitation by marketers, resulting in a situation when more than one organisation can with reasonable legitimacy make the same claim for the superiority of their company’s product.
Headquartered in Finland’s capital Helsinki, Outokumpu has been involved with minerals and metals for more than a century. The corporation’s name derives from the discovery of a rich copper ore deposit in Kuusjärvi in 1910, at a site described in Finnish as a ‘strange hill’ or ‘outo kumpu’. As a result, a copper mill, or ‘kopparverk’, was established in 1914, expanding its portfolio over the decades to include nickel, zinc and cobalt. At the turn of the millennium, the multi-metal and mining company became a specialist in stainless steel in response to global demand outstripping all other metals. Today, Outokumpu is a Nasdaq-listed group of international companies employing more than 10,000 personnel, presenting a corporate message stating: “Stainless steel is a long-lasting and durable material, enabling sustainable development towards a world that lasts forever.”
Kaplin, who has been with Outokumpu for “a long time – more than 20 years now”, started in the R&D department in 1999, just as the company was making its transition to a “steel-only” manufacturing unit. Her appointment followed a master’s degree in chemical engineering from Åbo Akademi University in Turku, Finland, which she remarks was slightly unusual in that “it’s not so common for a chemical engineer to go into a steel company. It’s usually metallurgists. But I have found my way through the organisation to work on the sustainability side of the business.” This career trajectory is one that appeals to her personal environmental outlook, which she can combine with her scientific academic background in an industrial context.
It also helps to have an analytical mind unfazed by marketing hype, because one of the problems with sourcing steel, as Kaplin notes in her paper ‘Comparing carbon footprints – how to avoid the pitfalls’, is that “while two products can appear identical in terms of composition and mechanical dimensions, their carbon footprints can be significantly different. That’s because steel mills often take differing approaches to energy efficiency and procurement of low-carbon energy for their processes, as well as using low-carbon raw materials.” She goes on to explain that another challenge “is that carbon reporting varies between suppliers and countries. Not all reporting methods consider carbon dioxide emissions from ‘cradle to gate’.” This means it’s crucial for buyers “to ask for the right data so that they can compare like with like”. Kaplin says you need to drill down into the data. “We’ve found that some of our competitors produce stainless steel with a carbon footprint that is five times higher. When compared with the global average carbon footprint, our production saves some eight million tonnes of CO2 annually.”
‘We use a lot of electricity to melt the steel. Really a lot.’
There are three major factors that heavily influence the sustainable manufacture of stainless steel. The first is how much recycled steel (or scrap) is involved in the process, “because it is always better from an environmental point of view to remelt recycled steel than to use virgin material. We are fortunate at Outokumpu in that we are very Eurocentric. We have our mills in Europe (and one in North America). In these regions we have a mature market, which means that there is a lot of recycled steel available to use – not enough to meet our needs, but more than in some other areas of the world.”
This shortfall is against an overall increased demand for steel in the future that “creates the problem of how we go about decarbonising the supply chain. By 2050 we need to get net zero when it comes to CO2.” She comments that Outokumpu is engaging with initiatives “like Science Based Targets, a programme backed by the UN Global Compact that requires businesses to set ambitious long-term objectives, with milestone targets along the way”.
While using recycled steel will become more important over time, “we have worked hard to develop strong relationships with our scrap metal suppliers. This includes technical requirements of sourcing scrap with the right alloy composition. Better-quality scrap of the right composition is key to using recycled steel as efficiently as possible, taking advantage of all the valuable alloying elements that are present in the scrap.” But “it is not an infinite resource, especially as we are increasing production”. Which means that when it comes to recycling steel, we’re in the world of diminishing returns, harvesting material from a time when it was less abundant. One mitigating approach is to be more efficient, “and we are looking at efficiencies not just from a sustainability point of view, but also economically: how to use the resources in the most efficient way”. Kaplin says that, ultimately, Outokumpu’s customers have a role to play here by adopting design for recyclability practices, “so that in the end when you are throwing away something, the materials are easily identified and going in the right direction when they are sorted and hopefully recycled”.
Second is electricity. “We use a lot of electricity to melt the steel,” says Kaplin, “really a lot. So having clean electricity is important. Our melt-shops are in Finland and Sweden, with a further one in the US. We are fortunate to be in counties where we can source low-CO2 electricity. But we are also actively lowering that CO2 electricity footprint by having contracts with producers of wind-based and nuclear electricity.”
Kaplin says that she prefers the term ‘low-CO2’ to renewable due to the high nuclear component in Outokumpu’s energy mix. She’s realistic in stating that “a lot of greens don’t like that. But it’s what we use because it is also about availability at feasible cost. Since we need a lot of reliable low-CO2 electricity, we need nuclear as part of the equation.” Kaplin develops the point by introducing the circularity that if we are to pursue the societal trend for more renewable energy, it follows that there will be the requirement for more infrastructure in the form of windmills, which means we need to make more steel. Kaplin’s third factor is about sourcing materials that have a net-zero footprint. “Key raw materials that we cannot supply fully through the recycled route are chromium and nickel. Outokumpu is unique among the world’s stainless steel producers in having our own chromium mine in Kemi, Finland.” They have set themselves a very tough target of becoming carbon neutral by 2025.
The commercial incentive to produce cleaner steel extends beyond corporate environmental responsibility and compliance with regulatory obligations. While Kaplin believes that “to be around in another 20 years you need to be in the forefront of tackling climate change”, producing green steel also creates competitive advantage, an idea that is “firmly rooted in Outokumpu’s management”. But there is also the need to cater for a consumer market that displays an emerging trend to ‘buy green’ even if this comes at an elevated price. On the face of it, for the end-user of white goods, automobiles or kitchenware, there is no material advantage to the finished product itself because “it’s the same steel. There’s no difference in the steel itself. The difference is in how it is produced: what the manufacturer does to minimise emissions along the supply chain.”
Kaplin says that it wasn’t until a few years ago that she noticed “something was starting to happen on the customer side. They began to become aware of their environmental or sustainability profile and started to ask about these things. They wanted to ask about their requirements for green steel. As a manufacturer we are quite far away from the consumer, but I think this demand for sustainability is catching up through the supply chain.” It’s a demand that’s creating pressure from both ends: regulatory authorities writing the standards, while the consumer reacts to the social trend towards sourcing more sustainable cars, refrigerators and frying pans.
Kaplin finishes up by saying that while stainless steel has historically become “known and appreciated” for its long-lifetime qualities that make it so attractive to the construction, automotive and white goods industries, “the environmental and sustainability performance of any business is only as good as its supply chain. While two products might be physically, chemically and mechanically identical, there may be a drastic difference in their carbon footprint.”
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