There has been a shift in the way Australia looks at business operations. Instead of acting exclusively in the best interest of their shareholders, companies are being pushed to factor the interests of their shareholders – their employees, customers, and the communities in which they operate—into their decision-making.
The general public is certainly driving much of this shift. According to a survey performed by the global public opinion and data company YouGov, 87 percent of Australians believe businesses have a responsibility to do social good, and six out of ten think businesses have a responsibility to ensure their supply chain does not harm the environment and is free from damaging practices such as sweatshop labor. A joint survey conducted by Accenture and the World Economic Forum indicated that business leaders are overwhelmingly aware of these views, with 72 percent of the CEOs surveyed saying citizen trust will be critical to their competitiveness in the next five years.
Indeed, becoming a sustainable business does more than just assuage public opinion. ESG investing has taken a firm hold in the markets as investors look past the financials of the business and use factors such as a company’s environmental impact, social responsibility, and corporate governance as a means to help identify companies with superior business models. According to the Global Sustainable Investment Alliance, at the start of 2020, global sustainable investment reached $35.3 trillion in five major markets, a 15 percent increase since 2018 and a 55 percent increase from 2016. Bloomberg has projected that the total will probably exceed $50 trillion by 2025, accounting for more than one-third of the projected $140.5 trillion in total global assets under management.
According to Vik Bansal, chief executive officer of the steel manufacturing company InfraBuild, a business that is focused on sustainability is one that is also positioning itself for long-term development and growth. Below, we explore the steel industry’s potential for sustainability and how Bansal is directing InfraBuild to implement transparent initiatives to the benefit of Australia as a whole.
The steel industry in numbers
Globally, steel is the lifeblood of modern society. Steel is used in everything, from the houses we live in to the cars we drive to the utensils we eat with. Working with Oxford Economics in 2019, the World Steel Association sought to evaluate and quantify the industry’s economic and social impact on a global scale. The international trade body for the iron and steel industry found that for every two jobs in the steel sector, 13 more jobs were supported throughout its supply chain.
With roughly 6.1 million people employed in the steel industry globally, that means that some 40 million in total work within its supply chain. The study found that the total value-added contribution either supported or facilitated by the steel industry accounted for $4 trillion AUD (3.8 percent of the global GDP), indicating the sheer scale of the industry and its contribution to the livelihood that crosses sectors and country lines.
In Australia, over 100,000 people currently work in the steel industry, but in recent years, the sector has been languishing due to outsourcing of manufacturing to other countries, such as China. In the post-World War II era of the mid-20th century, one in three Australians worked in the manufacturing sector, but today that number sits at just one in 13. Even just 50 years ago, in the 1970s, the manufacturing sector made up 30 percent of Australia’s gross domestic product, but today it is as little as six percent.
According to Bansal, rebuilding Australia’s manufacturing and steel industry will be a key factor in its recovery and growth in a post-pandemic world. The economic stress caused by the coronavirus pandemic and subsequent lockdowns on a global scale has changed the way governments view their industries and supply chains, and state and federal governments alike in Australia have been looking at ways to build a circular economy within the country – one in which resources are used and reused in a constant loop.
Government initiatives bolstering action
In October 2020, the Australian government announced the Modern Manufacturing Initiative (MMI), a $1.3 billion AUD fund created to drive lasting change for Australian manufacturers such as InfraBuild. An act seeking to reverse the trajectory the manufacturing sector was on prior to the coronavirus pandemic, the MMI is a major aspect of the government’s plan to bolster Australia’s manufacturing capabilities and use them to drive economic recovery and a sustainable future, known as the Modern Manufacturing Strategy.
By changing the view of Australia to that of a high-quality and sustainable manufacturing nation, the government hopes to create a stronger, more modern, and more resilient economy. Bansal has said the prior way of doing things placed undue reliance on global markets, international trading partners, and supply chains that the pandemic revealed are not always going to be reliable, but the initiative’s development acknowledges the role of a thriving domestic manufacturing sector.
This would also have a profound effect on the employment of individuals, helping to build robust and healthy local communities and economies. While a service-industry-based society has the ability to perform well during times of economic prosperity, the coronavirus pandemic showed that the house is built on sand as seen by the mass unemployment which carried with it social and economic issues.
Sustainability and stability
The MMI has the potential to transform Australia’s steel industry not only in terms of its economic output but also its sustainability. The initiative’s Recycling and Clean Energy Priority area indicates a goal to provide investment and support for low-carbon metals manufacturing, and as Australia’s only vertically integrated EAF steel manufacturer and recycler, InfraBuild will certainly be able to make the most of its benefits.
Even prior to the government’s initiative, InfraBuild has for a number of years been working to implement low-carbon steel manufacturing technology and processes. Their manufacturing approach aims to lower their carbon footprint by recycling scrap metal to reduce pollution, saving resources, and reducing the amount of waste going to landfills. Their electric arc furnaces greatly reduce the energy required to make steel when compared to more traditional steel production methods, and under Bansal, they are currently exploring renewable energy sources to power them.
Australia’s InfraBuild is just one example of how sustainable business models can benefit society as a whole. A sustainable business is one that contributes to the people and communities it serves, realizing that they are the true bottom line. As consumers and shareholders become more aware of the importance of sustainability, companies that implement it into their business models will inevitably better prepare themselves for the future. Vik Bansal’s commitment to sustainability shows businesses that focus on purpose rather than profits will inevitably generate them.
“I’m excited about the future of manufacturing in Australia, the clear policy framework the government has put in place to ensure its revival, and the critical role that the domestic steel industry will play as an enabler of long-term economic and social sustainability for generations to come,” said Bansal.