Ladies and Gentlemen:
The global economy is facing its biggest crisis in decades. Within a very short time, the outbreak of the Covid-19 pandemic triggered a massive meltdown in demand in almost all countries and sectors. Economic uncertainty has grown by leaps and bounds. Both voestalpine and its employees are directly affected by the economic fallout of this crisis.
In this situation, voestalpine is giving highest priority to the health of its employees. Measures to protect the workforce were immediately put in place at all of the Group’s sites worldwide. Wherever operations allow, our employees and co-workers work remotely from home. Given the ongoing health risk, these precautions will be implemented across the board until further notice.
But voestalpine also responded rapidly at the economic level, adjusting its production capacities to the changed business environment. A large number of employees in Austria and Germany were registered for short time work to ensure as best as possible in this situation that the company would not have to cut jobs; similar models were applied internationally. Nobody knows at the time this Report is published when the health and economic crisis will be overcome.
What is clear, however, is that nothing will change with respect to voestalpine’s clear commitment to sustainable corporate governance and climate change mitigation. We have underscored this commitment not least by signing the UN Global Compact (UNGC) and engaging as members in industry policy initiaves such as ResponsibleSteel.
As an industry trailblazer in the field of climate change mitigation, voestalpine has already spent years working intensely and urgently on technical scenarios aimed at decarbonizing the production of steel. The November 2019 launch at our plant in Linz, Austria, of the currently largest and most advanced electrolyzer facility in the world for the production of green hydrogen was a major step in the drive to accelerate this technological transformation. This EU-sponsored H2FUTURE project serves to test the large-scale industrial production of green hydrogen, which is to replace fossil fuels in steelmaking over the long term. As part of the Sustainable Steel (SuSteel) project in Donawitz, Austria, moreover, voestalpine is conducting research on how to achieve zero carbon production of crude steel using hydrogen plasma. In the long run, the Group seeks to increase the use of green hydrogen in the steelmaking process step by step so that it can bring about a more than 80% reduction in CO2 emissions by 2050.
Until these technologies are actually available, voestalpine will test an interim step involving hybrid technology, i.e., the incremental switch in the medium term from coal-based steel production in blast furnaces to electricity-based steel production. This will make it possible to lower CO2 emissions by about one third after 2030, specifically, by between three and four million tons annually. In terms of both the implementation of a hybrid technology and the long-term technological transformation based on green hydrogen, however, the decarbonization of steel production hinges fundamentally on the availability of electricity from renewable energy in adequate quantities, at financially feasible prices, and via high-efficiency grids.
As for current production, it goes without saying that that we will continue all our efforts to reduce our consumption of resources and focus intensely on ensuring accountable supply chain management beyond our factory gates.
But we make a substantial contribution to a more livable environment not just through our processes but also through our products: whether through still higher tensile and thus lighter steel grades for the automotive industry, fully digitalized rail technology systems to expand mass transit networks, sophisticated pre-materials and components for electric motors, or innovative steel solutions for generating renewable energy. We believe based on our intensive research and development work—the requisite financial expenditures reached a new high in the business year 2019/20—that there will be many opportunities for us in the future to actively support climate mitigation work.
Our focus on sustainability in the reporting period also led to a first in the realm of funding: voestalpine is one of the first companies to take out a syndicated loan from its banking partners that is tied to environmental and social governance (ESG), which means that the interest on the loan is linked to the Group’s ESG performance among other things.
Above and beyond the aforementioned environmental and economic initiatives, the present Report also focuses, in particular, on voestalpine’s labor force. With their know-how and their spirit of innovation, it is our employees who ensure day in and day out that our company achieves progress toward ever more efficient processes and ever better products. The Covid-19 crisis has shown yet again how important highly qualified and highly motivated employees are to maintaining the company and boosting its international competitiveness. This is precisely why we chose, even at this juncture, to continue our policy of training our own skilled workers and to step up the recruiting of new apprentices.
Thanks to our employees’ dedication and voestalpine’s resulting excellent technological position, I can look to the future with cautious optimism despite the extremely challenging economic environment. We will emerge from this crisis stronger than before only if everybody works toward that goal. With this in mind, I hope that you will enjoy reading voestalpine’s informative Corporate Responsibility Report 2020.
Chairman of the Management Board