A&O advises on creation of Sustainable STEEL Principles to promote greener steelmaking
21 October 2022
Allen & Overy has advised RMI (formerly Rocky Mountain Institute) and a group of leading steel industry lenders on the creation of the Sustainable STEEL Principles (SSP), the first climate-aligned finance (CAF) agreement for the steel sector.
On 23 September, six global banks announced they were signing onto SSP. They are Citi, Crédit Agricole CIB, ING, Societe Generale, Standard Chartered and UniCredit.
SSP is designed to significantly reduce carbon emissions from steel production – the largest source of industrial carbon emissions globally. This agreement amongst lenders, provides a framework for assessing and disclosing the degree to which the emissions associated with their loan portfolios are in line with 1.5°C climate targets. In doing so, this framework informs banks of how emissions-intensive their steel loans are relative to the net-zero pathway needed to stay within the world’s remaining carbon budget (a metric called climate alignment).
Co-head of A&O’s International Environmental, Climate and Regulatory Law Group, Matt Townsend said: “This is a major step forward for all those involved in the steel value chain. The Sustainable STEEL Principles will provide the steel industry with a practical tool to support decarbonisation of the sector and to work towards a pathway to net zero steel production by 2050. We’re really proud to be involved with this initiative.”
Signatories to SSP commit to the following five principles:
- Standardised assessment – a methodology to measure portfolio emissions
- Transparent reporting – a framework to disclose progress annually
- Enactment – instructions to obtain credible, high-quality data
- Engagement – recommendations for engaging clients on net-zero transition plans, and available financial products
- Leadership – a platform from which to proactively advocate for steel decarbonization
This innovative, voluntary CAF agreement is based on the success of the Poseidon Principles in shipping. Launched in 2019, The Poseidon Principles today include 30 banks representing over 50% of global shipping finance. Following a similar formula, SSP provides a collective platform for lenders to signal rising expectations of hard-to-abate industries to reduce emissions, and engage their clients to support the net-zero transition.
For more information visit the Sustainable STEEL Principles website: steelprinciples.org
STEEL Principles will provide the steel industry with a practical tool to support decarbonisation of the sector and to work towards a pathway to net zero steel production by 2050.