{"id":22056,"date":"2017-11-13T22:23:57","date_gmt":"2017-11-14T03:23:57","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/tata-leading-the-way-in-dealing-with-steels-black-sheep\/"},"modified":"2017-11-15T18:34:27","modified_gmt":"2017-11-15T23:34:27","slug":"tata-leading-the-way-in-dealing-with-steels-black-sheep","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/tata-leading-the-way-in-dealing-with-steels-black-sheep\/","title":{"rendered":"Tata \u2013 Leading the way in dealing with Steel\u2019s black sheep?"},"content":{"rendered":"

 <\/p>\n

The Steel industry finds itself at a critical juncture in dealing with climate change: it is one of the world\u2019s worst polluters [1]<\/sup>, one of the most affected by its impacts as the major supplier of raw materials to the automotive industry, and one of the industries with the most substantial role in using its supply chain to ensure long-term environmental sustainability (Figure 1)<\/em> [2]<\/sup>.\u00a0 Tata Group, renowned since its inception 150 years ago for its social responsibility to the communities within which it operates (and continuing to be owned by a charity) [3]<\/sup>, now finds itself with a significant moral dilemma as it is forced to embrace the entire global family as its community, and lead other industries as a beacon of responsible management and conscientious improvement in the face of increased competition and reduced demand.<\/p>\n

The use of energy in Steel production exceeds 6.5% of global CO2<\/sub> emissions each year [<\/sup>4]<\/sup>, with approximately 220kg of steel used per capita per year [5]<\/sup>.\u00a0 However, the hazardous emissions to air and water render it far more prominent in the global debate for climate than its CO2<\/sub> emissions alone.\u00a0 Furthermore, it represents around 95% of all metals produced but has a geographic distribution based on proximity to inputs (iron ore and labour), placing over 50% of total production in China [6]<\/sup> thus causing large knock-on environmental effects down the supply chain once the responsibility has moved off the Steelmakers\u2019 books.<\/p>\n

At present, Tata\u2019s major short term efforts to reduce the impact of the steelmaking supply chain revolve around recycling of steel \u2013 it cannot be consumed and remains the only truly cradle-to-cradle recycled material.\u00a0 However, contrary to the insinuations on the company website such as \u201cnot only fully recyclable, but [\u2026] actually recycled\u201d [7]<\/sup>, only about 41% of inputs to global steelmaking are from recycled sources today [8]<\/sup>.\u00a0 Academics estimate that 90% is theoretically possible [9]<\/sup>, leaving the industry significant room for improvement; this will not be achieved without worldwide advancement toward policy-making \u2013 something which has been proven notoriously difficult in countries such as China.<\/p>\n

Furthermore, Tata is currently working in the medium term to increase its proportion of electric arc furnaces.\u00a0 These use more steel scrap as a ferrous resource and less energy per ton than the current norm [9]<\/sup>.\u00a0 The major benefit of this is the theoretical move towards clean energy, where electrical input can be provided by clean sources such as wind or tidal energy \u2013 as opposed to the coal used in today\u2019s blast furnaces.\u00a0 Many furnaces are currently located near coastlines for cooling (eg: Netherlands) where access to different forms of renewables will continue to improve.<\/p>\n

Though many smaller tangential efforts can and should continue to be made to increase the proportion of recycled steel, supply chain managers can \u2013 and must \u2013 play \u201ca major leadership role in addressing the alarming consequences of aberrant global weather conditions\u201d [10]<\/sup>.\u00a0 Tata Steel should embrace its leadership position on the production side to advance two further solutions in response to the pressures it is under from climate change: committing to biofuels for industrial power, and increasing transportation efficiency with cooperative trade deals.<\/p>\n

Biofuels have long been hailed as a potential solution to many energy requirements, however it is in industrial production where their greatest disadvantages (such as a lack of developed infrastructure in their supply chain to ensure adequate delivery to end automotive users) can be minimised, and thus their use maximised [11]<\/sup>.\u00a0 Areas of barren land such as the Taklamakan desert provide fertile ground for the production of algal biodiesel, while still being close to major infrastructure to access steel production facilities in China [12]<\/sup>.<\/p>\n

Transportation is another example of how Tata could pave the way in increasing collectively beneficial activities across different players in such a globally-competitive industry.\u00a0 Prices in the last years have fluctuated beyond analyst expectations due to Chinese investments, with the major opportunities relying on proximity and speed to delivery, rather than variable production volumes.\u00a0 This structure provides a niche for a cross-company platform to trade steel across continents depending on prices and availability on a shorter-term basis.\u00a0 Such a platform was developed to great success for ocean shipping capacity, and should be developed in Industrial Goods.<\/p>\n

What remains for Tata and for the steel industry to opine and act on, is who should take the leadership in addressing some of the ongoing concerns mentioned above. Tata is in a position of responsibility for its commitment to community, yet does not produce the majority of global steel.\u00a0 In fact, that mantle falls on the shoulders of the Chinese: should Tata lead the way to improvements and risk cutting itself out of a commoditised market if the Chinese do not follow, or should it do whatever it can to remain competitive?<\/p>\n

(Word count: 793)<\/p>\n

\"\"<\/a>
Figure 1 <\/strong>– role of industrial goods in ensuring long term environmental sustainability in their supply chains<\/figcaption><\/figure>\n

\u00a0<\/strong>Sources<\/strong><\/p>\n

    \n
  1. International Energy Agency statistics, http:\/\/www.iea.org\/statistics\/topics\/CO2emissions\/<\/a> , accessed November 2017<\/li>\n
  2. SCM World Future of Supply Chain Survey 2015, SCM.com<\/a>, accessed November 2017<\/li>\n
  3. \u201cTata Sons: Passing the Baton\u201d, Forbes India, http:\/\/www.forbesindia.com\/printcontent\/31052<\/a>, accessed November 2017<\/li>\n
  4. \u201cSteel Production and Environmental Impact, data from IEA, http:\/\/www.greenspec.co.uk\/ building-design\/steel-products-and-environmental-impact\/<\/a>, accessed November 2017<\/li>\n
  5. World Steel Association on environmental sustainability, https:\/\/www.worldsteel.org\/steel-by-topic\/sustainability\/environmental-sustainability.html<\/a>, accessed November 2017<\/li>\n
  6. \u201cWorld Steel Production by Country 2017\u201d, World Steel Association, https:\/\/www.worldsteel.org\/en\/dam\/jcr:44ae2d3d-62ff-4868-9f60-e17a43e75092\/Crude+steel+production_March+2017.pdf<\/a>, accessed November 2017<\/li>\n
  7. \u201cThe sustainable material\u201d, Tata external publication on company website, https:\/\/www.tatasteeleurope.com\/en\/sustainability\/steel%E2%80%93for%E2%80%93a%E2%80%93sustainable%E2%80%93future\/sustainable-material<\/a>, accessed November 2017<\/li>\n
  8. \u201cSteel Production and Environmental Impact, data from IEA, http:\/\/www.greenspec.co.uk\/ building-design\/steel-products-and-environmental-impact\/<\/a>, accessed November 2017<\/li>\n
  9. \u201cThe impact of climate targets on future steel production\u201d, scientific paper produced by Elsevier, http:\/\/www.sciencedirect.com\/science\/article\/pii\/S0959652614004004<\/a>, accessed November 2017<\/li>\n
  10. \u201cSupply Chain Leaders Urged to Embrace Climate Change Solutions\u201d, Logistics Management website, http:\/\/www.logisticsmgmt.com\/article\/supply_chain_leaders_urged_to_embrace_climate_change_solutions<\/a>, accessed November 2017<\/li>\n
  11. \u201cGrowing a sustainable biofuels industry: economics, environmental considerations, and the role of the Conservation Reserve Program\u201d, Scientific journal, http:\/\/iopscience.iop.org\/article\/10.1088\/1748-9326\/8\/2\/025016<\/a> , accessed November 2017<\/li>\n
  12. \u201cRheology of Algae for the production of biodiesel\u201d, Chemical Eng. Dept. Univ. of Cambridge, UK<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    Who should take the lead advancing the response to climate change in the heavily polluting industry? 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