By Annie Heaton, CEO of ResponsibleSteel

Steel is everywhere: woven into our homes, hospitals, vehicles, power grids and wind farms. But the way it’s produced spans continents. The raw material could be mined in one country, processed into steel in another, and manufactured into a final product in a third.

As the sector navigates rapidly changing regulation and investor pressure, it is becoming a testbed for something bigger: how credible, comparable data can build resilient industries and drive responsible finance.

The steel sector is trying to steer climate progress, yet visibility is patchy.

THE MISSING METRICS

Applying best practice or even tracking progress across steel’s global supply chain is nearly impossible without a shared language on what ‘good’ looks like.

Investors rely on consistent, comparable data backed by common benchmarks to manage risk and generate value. But in industries like steel, where supply chains are complex and cross-border, the data is often inconsistent, opaque or impossible to compare. This makes risk hard to price and good performance hard to reward. Even the most transparent data carries little weight.

At the same time, with the EU’s CBAM as well as mandatory climate and sustainability disclosure requirements in the EU, Japan and, soon Korea, steelmakers and their buyers are forced to demonstrate their sustainability credentials with greater clarity.

The result of these disjointed standards is a market riddled with mispriced risk and missed opportunities. Misaligned standards don’t just cause confusion – they actively slow down investment in credible climate solutions by making it harder to identify which producers are genuinely aligned with sustainability goals.

BEYOND EMISSIONS

Existing frameworks within the industry still focus primarily on emissions. While vital to low-carbon infrastructure, they often overlook social dimensions like labour practices and worker safety. Overlooking these risks can damage company reputation, lead to legal liabilities and project delays – all of which carry financial consequences.

In other words, what’s good for people is often good for business too.

To build a genuinely responsible and investible steel industry, there needs to be a full-spectrum sustainability framework that integrates environmental and social impacts. That means producers and investors working from the same playbook, using a shared definition of what progress looks like.

Only then do we arrive at a more complete and credible model for a responsible industry.

AN ECOSYSTEM FOR EFFECTIVE SUSTAINABILITY STANDARDS

There is a hopeful, emerging consensus on how to measure steel emissions across the industry – not as straight forward a solution as it may seem. But there’s also a growing understanding that a benchmark for progress in steel must be more intelligent than simply measuring emissions. Encouragingly, frameworks launched recently in both Europe and China – home to more than 60% of global steel production – underpin this. These frameworks prioritise deep decarbonisation efforts, rather than stop-gap measures. In the case of scrap steel, which can cut emissions by up to 70% but remains an extremely constrained resource, the frameworks take a nuanced approach to rewarding companies for scrap use that optimises the lasting decarbonisation across producers in the sector.

If steel – one of the world’s most globalised and hard-to-abate industries – can align around good, common standards, the ripple effects could be transformative.

Creating information efficiencies through consistent data and a common language would enable smarter capital allocation, stronger supply chains, and clearer accountability across borders.

And we don’t need to reinvent the wheel. The tools investors and regulators rely on today – financial reporting frameworks, risk rating systems – already show the utility of credible, standardised metrics. Now we need the same for sustainability: an ecosystem that combines trustworthy metrics with a common interpretation of what counts as credible progress.

That will require co-design. Industry, investors, workers and civil society must shape the standards for steel that define success. Standards like ISEAL’s credibility principles, that have guided the development of global standards from coffee to copper, and LEED’s ratings system for sustainable buildings and cities show how co-developed frameworks grounded in environmental and social integrity reflect shared priorities and deliver long-term value.

A COMMON LANGUAGE TO UNLOCK INVESTMENT

Steel accounts for nearly 4% of global GDP. It also represents an opportunity: to prototype how complex, high-emitting sectors can become legible and investable in a decarbonising world.

Achieving that starts with agreement on what ‘good’ looks like – a common language for sustainability performance that can guide policy, attract capital and build trust.

With robust, trusted data and collaboratively built standards, steel can be made resilient to regulatory, commercial and reputational risk – and resilient over time. But only if industry, investors and regulators align now.

The steel sector can then serve as a linchpin that unlocks well-formed investment decisions for the industries of tomorrow – but only if we align on what ‘good’ looks like now.

Any opinions expressed in this commentary reflect the views of the authors and not of Carbon Pulse.