BlueScope Steel Limited (BSL) Earnings Call Transcript & Summary

All right. We're ready to get started again. Welcome back from the break, everyone. So we've had quite a deep dive this morning from Chris and Anna, Dave and Tania into our updated decarbonization pathway for iron and steelmaking and our refreshed enablers. And they are certainly very much the core of our climate action program. And certainly, what we need to be advocating for. But what I'm going to do now is just take 15 minutes to zoom out on to our broader climate action program, because believe it or not, that's not all we're doing. So first, a very -- recap on our climate strategy. We first articulated this in our Climate Action report in 2021. And continues to remain appropriate and redirects the efforts of both our corporate team and our business units. Earlier this week, we published our sustainability report. You may have had a chance to have a look at that or not so far, but the climate action chapter in that report provides a good progress update and overview of what we've been doing. And what you'll find in the slides for the investor presentation is that there are hyperlinks at the bottom that direct you to the appropriate pages in the report associated with each of the slides. So as you've already heard, the bulk of our effort is in that reducing our direct greenhouse gas emissions. And that's both now and in the future, and Dave covered some of the current examples for Port Kembla and Chris talked a lot about the future. We also offer carbon efficient and climate resilient solutions for our customers, such as the refreshed pallet in COLORBOND of the lighter colors that Gerald referred to with high solar reflectants paints. High-strength steels, so engineers and designers can use less, light gauge steel framing products, such as TRUECORE, so we can manufacture buildings with less wastage and in some cases, replace heavier gauge products. But also just as the basics we often forget about is reducing corrosion loss of steel. The better we protect our steels through painting and coating. The longer they last the less steel we need to use and also an increasing use of our weathering steels in external steel structures. On renewables, we remain committed to the Finlay solar farm, which supplies about 20% of our needs. And as been alluded to, and I'll touch on a bit later firmed renewable power contract in New Zealand associated with the EAF project. We also have a number of behind-the-meter solar projects taking place in our operations around the world. Our strategy on offsets remains unchanged, and that is to use them where direct abatement is not feasible. But also as a way potentially to respond to the needs of customers for lower embodied emissions product, which are emerging potentially faster than we are technically able to meet them. In terms of local communities, we've already heard from Tania and others that the best outcome, we believe, for our communities and the environment continues to be locally produced steel that is made in line with Australia and New Zealand and the U.S. is high environmental and labor standards. And our responsible steel certifications provide evidence of this for our customers and other stakeholders. And finally, as you've heard from Anna, there is an awful lot of external activity that we need to monitor and engage on. And that's not just in government policy, but also a change in regulations and upcoming changes in reporting requirements. We'll just take a quick look at our lagging indicator. We continue to improve on our emissions intensity across both our steelmaking and non-steelmaking targets and are now well ahead of our steelmaking target. That larger step down this year is driven by the North Star expansion ramp-up as that's a lower emissions intensity footprint. Also, energy and resource efficiency programs in Australia and New Zealand, such as our blast furnace humidity control project and hot accretions crushing, which reduced coal usage and also increased scrap usage. In the non-steelmaking businesses, our business units have put a lot of effort in over the last year to building out a solid pipeline of projects to implement on a site-by-site basis. And they also focus particularly on energy efficiency and waste heat recovery through the metal coating and painting processes. So projects such as of an upgrades. I would like to emphasize, however, as I always do, every time you hear me talk about these targets, I will say that progress against these will be nonlinear, because it does take a long time to get a project from concept through to implementation. So it will be a series of downward steps. It can also be lumpy because they are intensity targets, tonnes of the denominator, and they can vary with production tonnes from year-to-year. As a leading indicator for climate action, we look at our project pipeline. And our pipeline is healthy. It has a number of projects moving through the pipeline over the last 12 months. It is a bit tricky from where you're sitting to compare last year's one to this year's one because there are ins and outs in every category. In a perfect world, the project would come in at the concept and pop out ultimately at the execution in. That isn't how it works. However, projects do drop out along the way. We refer to kiss or kill the project at the stage gates. And they may not pass a cost benefit analysis or they may be superseded by a better project that's overtaken them. It's worth noting that these are just the tip of the iceberg project in the very small print in the footnote. It spelled out that this is only a project over a certain size threshold -- they're actually underpinned by many tens of much smaller projects underneath them. A real highlight for us this year has been the accelerated feasibility study for the New Zealand electric arc furnace, and we were really pleased to announce recently that that's moved now into the execution phase. So Anna took us through -- or Anna and Chris took us through the 5 enablers necessary for decarbonization. And this is an example of what happens when they do line up. So when we can, we do. And in this case, we have that collaboration and co-investment with government. We have got low-cost firmed renewables in partnership with our supplier and a win-win demand opportunity, demand management opportunity that helps us to provide stability to the local grid. And sufficient domestic scrap of the right grade to support the product mix. And for those who like the technical questions, and we had one before, remembering that the New Zealand business also produces long products. which helps us to use a slightly wider range of scrap grades. So in the diagram there, you can see the primary iron production process in New Zealand. It's rather unique. It was invented to use the New Zealand iron sands approximately 50 years ago. And the transition involves taking about half -- exactly half of the primary train out. So removing 2 kilns and 1 melter and replacing that with a scrap-based EAF that can also take a molten iron charge that comes out of the remaining primary pathway. And the emissions reduction here is about 800,000 tonnes per annum. It's enormous. It represents about 1% of New Zealand's emissions. And this is the lowest cost per tonne abatement project ever for that New Zealand GIDI fund that, Anna referred to earlier, the government investment in decarbonizing industry. Still at the same time, we continue to explore options for future further decarbonization of the ion sand reduction process itself and that includes our continuing support for the University of Wellington research into hydrogen iron making with iron sands. In our non-steelmaking operations, as I said, we have many projects running and this slide has a few specific examples. The CPL 2 oven replacement at Westernport is -- you'll find that on the list of sustaining projects rather than the list of climate projects. So the split of CapEx between sustaining and climate is not always as clean as you think. But it comes with significant greenhouse gas reduction benefits through a reduction of natural gas usage through that oven. In terms of waste heat across our midstream or non-steelmaking businesses, we've got significant opportunity around the installation of RTOs or regenerative thermal oxidizers, either installation or upgrade. We already have quite a few of those, but there are more sites where they could be installed and particularly through our recently acquired BlueScope coated products business in the United States. And as I mentioned earlier, solar projects are gaining traction, particularly across our Asian businesses. We do these where it makes sense to do them where there is a positive business case to do them. And in a number of cases, these are behind the meter project, and they are actually cash positive in that they improve our overall energy costs and reliability in those regions. So that was just a quick one over lightly about what else is going on in climate action. And as you can see, it's quite a lot. Now for the remainder of the session, we're going to move through into some other sustainability topics. Our care and commitment to health, safety and environment is integral to the way we do business at BlueScope for our productivity, our success and for our people, those that work in our business, in our supply chains and in our communities. The safety, health and well-being of our people is paramount as are our values of trust, respect and teamwork in the workplace. We are dedicated to protecting the environment and to be a responsible neighbor and providing smarter steel solutions through resource efficiency. So I'm now going to hand over to Mike Hussey, who is our new Head of Health Safety and Environment to take us through some highlights.

And thank you all for giving me this opportunity to talk to you. As Gretta said, I'm very new in this role, but I am long-term BlueScope. And as Gretta just mentioned and also Mark at the start of today, health, safety and well-being of our employees is core to BlueScope as is our care environment, and also how we work with our local communities in which we operate. With that in mind, and I guess with a continuous improvement mindset, we are evolving our approach to health, safety and environment, and we're looking for smart HSE solutions. So we're looking to build further capacity in both our systems and our processes, where we want to develop a learning culture, have that -- have our people engaged in working with us to develop new ideas and new ways of working. And we're looking to strengthen our controls across the business because mistakes can happen. So where can we strengthen those controls to make sure that those mistakes don't deliver horrible outcomes. We're also focused more on leading indicators moving forward. So on the right -- sorry, on the left-hand side of this page, you can see that some of these leading indicators that we're focused on. For example, we've completed 249 risk control projects across BlueScope in the last financial year, building upon other projects completed in previous years. But these projects are what I would describe as sort of grassroot campaign projects. The ideas envisaged by our workers and our frontline supervisors, and they're all about reducing the various different risks that we have across our business. Similarly, we've had 48 nominations for our environment star award process. And over 1,500 employees engaged in that learning journey, working in teams to highlight issues, put forward solutions and then implement. On the lagging indicator side, our total recordable injury frequency rate, or TRIFR, as we generally refer to it. We did see an increase in that in FY '23. A final number of 7.5. And that is certainly above our long-term aim of between 5 to 7. There are some reasons for that increase. Certainly, one of those was inclusion of our BlueScope recycling business in those numbers. If that business had been excluded, then the number would have -- the result would have been 7.2. We also recorded 43 environment, noncompliances across our business last year. That also was an increase on historical averages, but with some specific reasons behind that. Firstly, New Zealand, there was some pretty extensive rain periods, particularly, I think, through January and February, which led to some -- obviously some storm water control issues. We've also had some increasing wildlife issues in some of our Australian businesses, which contribute to [ Ecolabels ] accounts in our water and also, again, inclusion of new businesses in those numbers. I have to move on to a new initiative that we've launched in BlueScope in this financial year. And I will be showing you a video soon that will, I think, do a better job explaining the process than what I can. But we've drawn on research from the World Health Organization and other international authorities to help us pull together a new model for health and well-being at BlueScope. So as I said, maybe to make it easier to understand, I'll show this video, which is actually the video which we've been using for employees across 2023 to explain what health and well-being at BlueScope means. [Presentation]

At BlueScope, there is essential to how we work, and we're proud of our safe and inclusive workplaces. We also recognize how important it is to look after our wholesales to promote and protect good physical and mental help and show how important it is to have positive working relationships, which enable us to be successful in our on. It's why we've developed BlueScope, health and well-being, underpinned by our purpose and our bond, BlueScope Health and well-being is a model designed with all of you in mind. At the heart of it is a simple way we can check in with ourselves and each other to better understand what keeps us healthy and able to thrive at work. We call this the well-being wheel. With each quadrant describing different factors that influence our lines. Let's start with top workplaces, which includes environmental factors we have in our workplaces, facilities and amenities. Our codes of practice, occupational hygiene and economic assessments are some of the ways we're keeping our workplaces healthy. Next up is thriving at work. which captures the work organization factors like being content with our career growth and working conditions. This covers things like, our commitment to training and development, being innovative and how we structure our work. We then come to thriving culture. It shows that a sense of connection and good leadership are needed for a strong culture that supports our well-being. We're delivering this with initiatives such as our learning and development programs and our commitment to inclusion, diversity and respect. Finally, this brings us around to healthy people. where the key factors of mind, body and lifestyle are all vital and need to be regularly nurtured. This covers a range of educational materials and services we offer around mental health training and physical health programs. So with the well-being wheel to guide us to look at key focus areas, how can we support each other to be well and thrive at work? You can play your part in helping to identify risks and protect a nurturing empathetic and strong workplace culture by raising awareness of health and wellness issues to support each other, our teams and leading and taking opportunities to promote learning and the sharing of positive well-being practices and recognizing how these can improve our lives and workplaces. Find out more about BlueScope health and well-being on our internet and take time to discuss the model in your workplace, looking after each other at work starts with you and those around.

So I hope that gives you some insight into what we -- what we've introduced across the business in this calendar year. I think really pleasingly, we're starting to see some practical application of the model. So from Jim Facilities, Physio programs, health initiatives in our U.S. businesses and also in Australia, too. There was some amazing well-being community days which have been held in our ASEAN and China businesses. A real focus on psychosocial risk in Australian Steel Products. And also a mental health-focused forum and occupational hygiene focus in a New Zealand Pacific Islands business. So Again, I think this program strongly supports our commitment to diversity, inclusion and leadership development at BlueScope. And I think that's sort of a good segue for me to pass over to Kerri, who will take us through the next stage.

Hi, everyone. I'm Kerri, and I'm the Head of Social Impact and Inclusion. My role exists to drive our inclusive culture strategy. and align that across the group. And from a social impact perspective, it's twofold, create positive social impact and mitigate any adverse impacts from our operational sites or our products or our business partnerships. My role in function was created in February 2021. As BlueScope saw a need for us to ensure that we're meeting society expectations and most importantly, holding ourselves accountable to the same standard that we expect from our suppliers and other partners that we work with. I'm pretty privileged because I get to put the human at the center of every decision that I make. And hopefully, by doing this, BlueScope can make a positive impact to the vulnerable populations in our communities. One of the first actions 2 years ago was to create a cross-functional steering committee that would oversee the implementation of our social impact due diligence process. We've got representatives in that committee from sustainability, procurement, risk and FX teams and this diverse group at enormous value to the work because they bring individual experiences from each of their own areas of expertise. And also, they ensure that the strategy in the communication is shared and integrated right throughout the business in the various forums that they leave. I've since learned that this approach makes us pretty unique. And a lot of companies struggle to get that cross-functional ownership. For me, this demonstrates how seriously we take our obligation to address modern slavery and other human rights issues. So let me highlight just a few aspects of our approach. Managing human rights is much like our safety journey that Mike just mentioned. We want to know where we might have a near miss or a potential issue. We want to engage with our team members and empower them to help us find the solution that suits. We need to regularly audit our controls. And then finally, we want to have a continuous improvement mindset. So we continue to learn and adapt with every experience that we get. To help us with our journey, we follow the United Nations guiding principles for business on human rights. And this provides a set of steps that guide organizations just like us to understand where the risks are for the business and the sectors that we operate in. It strongly encourages us to use existing systems and processes to drive our action. And in this way, we start to change the ecosystem. It becomes less like a program then that has a start and an end date. We also have a principal-based approach for remedy and have been developing and refining this throughout the last 18 months as our experience has grown. And finally, building leadership awareness and capability is another really critical aspect to our approach. And each year, we focus on core topics and core leadership groups to advance our understanding so that ultimately we get to a point where leaders are starting to identify human rights issues themselves in exactly the same way that they do when it comes to safety. So the first step in the due diligence process is conducting a self-assessment. And I'll just cover off this process briefly because I think it really sets up why we're doing what we're doing. So to begin this process, we identify all of the human rights that are applicable for our business, such as the right to rest, the right to freedom of movement, et cetera. In terms of -- and so then what we do, we take those articles and those rights, and we assess them based on our own exposure. So where have we had actual instances or potential occurrences. Finally, we cross-reference this information with an assessment of severity to the affected party. On the left-hand side of the screen, you can see our assessment for this year has identified 6 categories. that are considered the most relevant to our business, and these are the ones in the blue highlight. On the right-hand side, I've listed our priority areas that have followed this assessment. So to summarize, we're prioritizing work regarding working hours regarding payroll compliance, force labor with a particular emphasis on foreign contract workers. Grievance mechanisms and harassment and abuse. This self-assessment is an annual process, and it's really interesting to see our understanding growing each year with the experience that we gain. That being said, we are on a huge learning trajectory. I'm very open and comfortable to the idea that we still have so much to learn, especially when it comes to modern slavery. And for a company like ours that operates in 16 countries and with a huge number of cultural norms, that's very complex to navigate. So finally, I thought you might like to see case study from last year that came out of that forced labor priority area. And hopefully, this will help to demonstrate to you how our approach works in practice. So as I said, we identify forced labor is one of our priority areas. Then we completed a risk-based desktop review of all of our sites to help us understand what would we prioritize, where would we start? Based on this review, we decided to do a proactive labor risk audit in at Malaysia at our Kapar site. Malaysia was selected due to the presence of foreign contract workers on our site together with a labor shortage in Malaysia post the pandemic and a regulatory system for human rights that is still maturing when it comes to modern slavery. So when you line up that very dynamic labor market, and our site profile. It stands to reason that we want to go in and understand as much as we possibly can to see if there are any gaps in our systems and processes. So once we chose Malaysia, we then engaged a third party called Elevate to conduct the orders and they're the experts in this field. The audit included comprehensive listening strategies, including foreign speaking interviewers when needed. We also used another third party to follow up that initial compliance audit and conduct deeper investigation as required. As this was one of our first proactive audits, we covered all contract workers on site as well as all employees to make sure that we maximize the learning. The findings from this 2-step process indicated that the contract security personnel who were foreign workers from the pool had grievances relating to modern slavery indicators. What this means is that some of our controls were not quite as strong as we had hoped. And this resulted in instances of, for example, passports being withheld from workers. Recruitment fees paid by workers to secure their employment and in some weeks, the mandatory rest day had not been taken. We're still working through some of the remediation phase. However, all remediation relating to those workers was actioned very promptly, including BlueScope stepping in to reimburse those contract workers for recruitment fees that they had paid. There were many insights and learnings for us post this audit, including those remediation principles, but probably the most significant was that modern slavery issues can be hiding in plain sight. And therefore, we must maintain our approach of proactive auditing based on those external known risk factors, and we almost also have to create a safe environment for all workers on our sites to speak up if something isn't right. This is the most effective way of us ensuring that we're maintaining our standards and controls. The other learning is that this is going to take time. We need to be patient, and we sort of need to ensure that at all times, our focus remains on protecting people as the #1 priority. I'm just going to switch our attention now on to inclusion and diversity. You may recall that you've seen this slide before. It outlines at a group level what our focus areas are for inclusion and diversity. And I'm now going to hand to Rebecca to bring to life what this looks like in ASP.

Good morning. I'm Rebecca and I've got the honor of being the GM of people for our Australian Steel Products business. I'm proud to return this year again to speak to our inclusion journey and our progress in creating a safe, respectful and inclusive workplace across the business. Inclusion is a core value for us. and we strive to reflect the diversity of the communities in which we live, work and operate. Together, inclusion and diversity are strategic enablers for our transformation strategy. We want everyone to feel a sense of pride in being part of BlueScope to feel valued, listen to able to contribute and realize their potential and be able to speak up safely. We also want our people to know how they can and do contribute to our purpose, which is our reason for being. Connecting them to us and having a workplace that is inclusive, respectful and one, that in the spirit of our bond reflects our communities. In Australia alone, our people identify with 123 different cultural backgrounds. We're born in 63 countries outside of Australia and speak 90 different languages. When we asked our people across Australia, we also found 5% of those who voluntarily responded, identified as LGBTQIA+, 2.5% have a disability, 2% to identify as Aboriginal or Torres Strait Islander. Now with such diversity, we can leverage these different backgrounds, life experiences and ways of thinking to be more creative, innovative and inspiring business. And that is why we take a strategic approach to inclusion and diversity. Our focus since 2016 has been on gender, which does remain a key priority, but we have also sought to grow and support underrepresented groups. In Australia, we see this with the launch of our First Nations framework and the newly formed Pride Network. We work closely and in partnership with local communities, trying hard to build strong engagement. Our First Nations framework has been informed by listening and through conversations with local elders seeking to understand and build trust. We also want to create an inclusive workplace that is respectful and where we choose to treat each other with trust and respect. One where it is safe to speak up, be heard and feel welcome. We are committed to continuing our change journey and holding ourselves accountable. We measure our progress. And although we are proud of our inclusive culture, we know there is always more we can and need to do. An inclusive workplace is a key element to ASP's people strategy. We want to enable teams to operate at their best by embracing diversity, instilling an inclusive culture and maintaining safe and respectful workplaces. And to do this, we are actively celebrating and respecting the uniqueness our people bring to work. In March, we created for the first time inclusion month, where employees across Australia could celebrate a month of inclusion with a focus on International Women's Day, Harmony Week, which celebrates Australia's multiculturalism and World Pride Week. There was an opportunity to learn, share experiences and celebrate with events held by local teams, our diversity networks in each state and the newly formed Pride Network. We're seeing an increasing range of employee-led initiatives across the business. Which is incredibly exciting as it's key to instilling an inclusive culture and makes it a fun and interesting place to work, reflecting our wider communities. Whilst it's so important to have the leadership example led from the top, it's also -- we're finding that we're getting the traction when it actually also comes bottom-up we're giving our people permission and empowering them to actually be able to work towards a greater understanding of differences in the workplace, greater levels of respect and experience, and we're getting a huge groundswell as a result of that across Australia. Perhaps let me now show you some examples of how we're trying to proactively support a culture of respect and increase the engagement across Australia. We very recently launched a new program we developed called Step Up, as part of our respect is how we work cultural program. Developed to enhance team's work and create diverse, inclusive and respectful workplaces that are safe for all. It is led by frontline leaders who facilitate discussions with their teams. They dive into topics to set the team up for success in creating and maintaining a positive workplace. The foundation is that strong teams step up with know-how and confidence to intervene when they notice a situation that's not inclusive, safe or respectful. The team and the team leader agree on the values and the way they will work together, agree what is not acceptable and give each other permission to call out bad behavior and seek help. It can be proactive in setting up a new team or when new team members join or reactive, when something has gone wrong and there's a need to reset. You'll also see on this slide our respective work posters, which you can see on the large screen at the gate and through the plant tours. These aim to promote inclusion and respect and highlight that it is just banter, just a joke, just a bit of gossip, is not acceptable. The color for attention graving and have stimulated some great discussions. These programs all play an integral part in a positive and psychologically safe organization that is aligned with our purpose and our bond. This time last year, we just launched our First Nations framework, and we've continued to progress a range of initiatives. We have a number of strategic pillars. And by the end of this year, each of those pillars will have a specific strategy developed. For example, we'll have a First Nations procurement strategy where we'll build local connections that result in opportunities for indigenous organizations to become suppliers and this work has already commenced. We are members of Supply Nation, and we recently attended the Supply Nation Connect event in Sydney, which had hundreds of representatives from Aboriginal businesses. There are capability statements circulating around BlueScope and 2 Aboriginal businesses are already in discussion for our national tender for stationary. So these strategies will be rolled out over 2024 taking learnings that will help inform and develop our national approach. We are aware that our national approach will also need to be tailored throughout the business and localized and be place-based. Pilot programs have commenced with more to come. For example, we've held a preemployment program recently in Port Kembla where we partnered with Illawarra use employment to support and increase the number of applicants from Aboriginal communities to our BlueBoots manufacturing recruitment campaign. That involved us bringing applicants on to site, giving them a tour having a learning circle to learn more about our business, about the roles and also talking about what it was like to work on a roster and shift work. We provided in-classroom support as well on how to respond to job applications, interview questions and held us some related assessment center activity. Our employee engagement also continues to grow with cultural awareness workshops run in the Illawarra and NAIDOC events held across the country. These were another example of being employee-led when Tania and Dave and Arnon and I went to Perth and to Western Australia, a couple of months ago during NAIDOC. We were thrilled to see that every site that we visited and we visited 4 metro ones, we're all celebrating NAIDOC week. And again, this is bottom up. They had initiated themselves a little bit of encouragement and guidance and the types of things that they could do. As Dave mentioned, we've continued to connect with community locally here by engaging Bangawarra to prepare the connecting with Country framework for our Port Kembla master plan so that our plans are informed by country. And we're also in the process of gifting a building and land to our local Illawarra Aboriginal Corporation. Our First Nations working group has been established with a unique way of working, trying to find the balance, both between both West and ways of business and cultural ways of working. And you will all have a copy of our First Nations framework here in your bags, which features the work of a local artist Jasmine Saran. She's created this outlook specifically for BlueScope. You may recognize the colors that are our COLORBOND colors. The large circle in the middle represents BlueScope. The smaller circles coming out are the sites and locations across our country, and we are showing the connection of sharing of knowledge and stories across BlueScope. The leads represent cleansing and renewal and the nurturing of relationships with all communities and the hands acknowledge and respect the traditional owners and custodians of the land. With that, I thank you for the opportunity to share our story and pass over to Tim.

Thank you, Rebecca, and hello, again, everyone. So we've heard quite a bit morning about some of the exciting opportunities for BlueScope businesses and ASP as it relates to products and what's happening within the broader sort of environment. So now with the help of -- and some support of peptone, the ASP Sustainability Manager. We're going to further explore some examples of how we and our products are contributing to a more sustainable steel industry. So as we've heard, steel is an essential material. It's critical to the energy transition as well as we being reliant on that energy transition. And it will continue to be a fundamental input into the renewable energy infrastructure and energy supply. Its strength, durability and recyclability means its circularity attributes are strong. And BlueScope is continuing to explore ways that we can further our contributions to steal circular credentials. You've heard earlier today about sort of the role around our acquisitions in the U.S. into the scrap supply chain. We're looking at the increase in scrap use, which you heard earlier from Dave as well. This is right across our operations. Utilizing the digital and modern manufacturing technology to increase our efficiency of the use of materials and energy, also mentioned by Dave. And then when we look at the products, we're focusing on the design life optimization, pursuing the extended use and also the reuse of our products. So a couple of examples, and Gretta mentioned a little bit earlier about the sustainability report. It is really difficult to capture all of our products in a corporate document like that. So what we've been doing over the last couple of years is try to anchor them into sort of a platform type approach. And you'll see the 3 sort of buckets there. We could build those out and do a little bit more. But there's a huge amount of opportunities and a huge amount of sort of products that we're supplying into different markets as it relates to sustainability. So I'll pick on -- I'll sort of draw out a couple of them and one that we've touched a little bit on is the core briefing solution. So really important in the built environment. These core solutions provide high solar reflectance, which helped reduce to reducing the roofing temperature and keep buildings cooler. The coating technologies, which we're very well known for and the performance testing that we do help improve the corrosion resistance of their products. And that means keeping the steel -- it's out into the environment, keeping its use as long as possible. And then our engineering building solutions, which support the efficient use of steel, so making sure that the steel that we're using is being best placed. And they provide pre-engineering -- preengineered functionality for rapid construction and then allowing the minimization of construction waste. Now I'll move on to an area that's pretty close to my heart and the work that I've been doing a lot over the last couple of years. But this is just one of the sort of the initiatives that are involved in on a global basis and sustainability standards, taxonomies, reporting initiatives are really important for consistent comparable targets that we're talking about earlier. And disclosures across the steel sector. And we see our participation in initiatives like this as a really integral part to the way that we talk about our responsible products. So ResponsibleSteel. Many of you will know that BlueScope was a founding member of ResponsibleSteel and I'm really proud of the role that we've played. I'm equally proud for the amount of work that's gone through from many BlueScope people in the development of ResponsibleSteel. It is an independent organization, but the standards that have been developed through a multi-stakeholder process, and BlueScope has played a really strong role contributing feedback through those processes. So back in 2019, the standard was launched actually here at Port Kembla in this room. And since that time, ResponsibleSteels influence and impact has grown. So where we sit this week, and I've just checked overnight. In the 4 years since that launch, we've had 61 sites received certification across 5 continents, 9 steel organizations. And those organizations in their global footprints represent about 15% of the world's steel production capacity. So we're talking thyssenkrupp, POSCO, Tata Steel, ArcelorMittal, U.S. Steel and of course, BlueScope, all have sites certified under the responsible steel site standard. Port Kembla Steelworks and other Wollongong sites like Spring Hill, where those in the room will also get out to see today. We're the first in the Asia Pacific region to receive site certification. Our Western Port facility recently joined the cohort of certified sites and our NS BlueScope for [ Lysaght ] is well advanced through their certification journey. And that site is aspiring to be the first certified site in ASEAN under responsible steel. So responsible steel with this sort of growing impact and reach is having -- continued to be recognized as the sort of leading steel sustainability standard largely because it's a multi-stakeholder approach, civil society and others contributing towards development. But equally, there is a much broader standard in rather than just focusing on the climate change aspects. It covers water, it covers labor rights and many of the topics that we've heard about today. So that recognition has been demonstrated through Green Building Council initiatives or green building certification initiatives, other sustainability initiatives like the first movers, coalition, but also being used for sustainable link finance instruments as well that we're seeing emerging. So our involvement in responsible still is just one of the ways that we're demonstrating with our sites and our products are managed and produced responsibly in line with our purpose. I'll now hand over to Pip to detail sort of how we use this with our broader stakeholders on initiatives like responsible steel and the important role that our products are playing in the Australian built environment.

Thanks, Jim, and hi, everyone. Pep Stone, Sustainability Manager in our Australian steel markets. business. My role is really customer-facing sustainability, and that includes our product sustainability credentials. So we engage with our value chain on sustainability because it is key to understanding the trends in the built environment and identifying opportunities to support our customers to achieve their objectives. We have long-standing memberships with organizations such as the Green Building Council of Australia. And these memberships provide us with a platform to engage with our customers and to share our progress. This year, we hosted a visit of Mecla, the materials and Embodied Carbon Leaders Alliance here at Port Kembla. In a session really not dissimilar to this one. Our customers were able to see the size scale of our operations and to better understand the challenges and opportunities of steel decarbonization, including how they can support us. We have a really strong focus on customer education. We deliver presentations and webinars via organizations, such as the Australian Institute of Architects. And this year, we developed a formal CPD course on responsible steel, which we are currently delivering to architects across Australia. Our messages are tailored to the role of the customer in the value chain. So indirect customers, such as developers and specifiers, they include design and whole of life considerations, encouraging systems thinking and holistic sustainability. So that focus on sectoral decarbonization alongside achieving project targets. And the importance of product transparency and stewardship, which I'll touch on shortly. We're also supporting our direct customers to tell their sustainability stories including assisting them on their own product transparency and stewardship initiatives. We do this by providing both detailed product technical information as well as our in-house expertise. Our product and manufacturing sustainability credentials are becoming increasingly important to our customers, and that's being driven by industry demand. We classify our credentials and certifications into 3 broad categories. The first is Environmental Product Declarations or EPD. These are based on Life Cycle Assessment or LCA, and they allow us to clearly communicate the environmental impact of our products over their life cycle. For a range of indicators, including Global Warming Potential or GHG emissions. EPDs are really similar to the nutritional labels that you get on the back of a food product in your supermarket that tell you how much sugar or salt is in that product. Same thing, but based on environmental impact. They are rigorous, robust, credible and third-party verified and they're recognized in key sustainability frameworks such as Green Star and NABERS, the National Australian Built Environment Rating System. We currently have 14 published EPDs, 11 published in the last 6 months. And our rollout continues. Our current EPDs cover most of our key branded products. We expect to have EPD across all of our products within the next 12 or so months. They are publicly available on various registers as well as on our website, and we've got a few in the next room for anyone who's interested in having a closer look. The second category there is Ecolabels. An Ecolabel certifies that a product has been manufactured in line with defined environmental standards. And can help specifiers, consumers and purchases quickly and easily identify products that meet specific environmental or broader sustainability criteria. In Australia, a number of our products are certified to global green tag green rate, achieving Level A, the highest rating. And the last category there is stewardship which, of course, relates to our Port Kembla responsible steel certification, and that certification is key to a number of our stakeholders, but especially to our customers. In Australia, responsible steel has been formally recognized in the Green Star rating tool, meaning that all of our Australian products produced from steel manufactured here at Port Kembla can support our customers to achieve Green Star ratings. It's not just our credentials and certifications however, that our customers value. Some of our products are also well positioned to help support our customers to achieve sustainable project outcomes through design. I've included a couple of examples here, and we've heard a little bit about both of these from Tim and from Gretta. The first features adaptive reuse. And this is a growing trend in the built environment, particularly in the commercial segment, rather than demolishing a building and rebuilding existing buildings are retained and adapted. And that results in resource efficiency and a corresponding embodied carbon saving. Still can support adaptive reuse cases in this example, in Lonsdale Street in Melbourne, TRUECORE steel frames were used to add 8 stories to an existing 12-story 50-year-old building. And the second example is cool roofing. A call-roof is made from materials designed to have high solar reflectors and thermal emissions to keep the roof surface temperature cooler in the sun. The performance benefits of a cool roof can include potential operational energy savings and thermal comfort improvements, but will depend on a wide range of factors, including the building type, the design and the location. In Australia, we have 11 COLORBOND steel cool roofing colors, which provide a simple pathway for customers to comply with requirements in the national construction code for roof cladding material. So as we continue to roll out product credentials and certifications across our product range, and anticipate and respond to emerging trends in the built environment, we are confident in supporting our customers to achieve their sustainability objectives. And I'll pass back to Tim.

Thanks, Pip. And now we're going to move into the second Q&A of the day. So I will ask Pip to come back up. And Mark, Gretta, I think we've got -- we've got Kerri and we've got Rebecca Roberts, joining us as well. So grab a seat up here. So same process as the earlier Q&A, we'll take questions through on the webinar -- sorry, on the webcast and also in the room. So as before, just please introduce yourself and where you're from and feel free to direct the question to our panelists.

Any questions?

Lee Power UBS. people. Tim, maybe for you, just to be interested to hear just around customers' willingness to pay for responsible or environmentally aware steel and maybe what you actually think drives that? What do they want? Do they want low carbon, do they want trading? And where do we think it plays out? Because it feels, I guess, that customers are willing to pay for performance, but maybe the emissions tracing component has kind of lagged a little bit of what I probably thought it would help.

Yes. It's a really good question. So I might throw it to pep in the first instance.

Sure. So you're right in terms of what they're interested in is the embodied carbon of the material primarily and not much else at the moment outside of credentials and certifications. In terms of willingness to pay, we've had a hand full of conversations at a very high level, but nothing material in that space yet. So I think it's a fair assessment that you've made.

So why do you think that actually is like -- like what do you think is holding back is that you just can't pass it on to consumer because it feels like the end market, the end consumer is well aware of sustainability and in other kind of areas are happy to pay for it and yet in steel, it feels like they're not.

I think that's not just steel. I think that's across the built environment more broadly. So we are starting to see some indicators that consumers are starting to be willing to pay, but very early signals, I'd say.

There are a number of initiatives that are trying to sort of draw that out. So -- and Pip mentioned earlier about Meklara Australia is around understanding, but sort of willing to see what's happening in different sectors. Responsible Steel has got a program work with the Climate Group at cold Steel Zero, so which is around, again, setting targets around aspirations for purchasing lowering embodied emission steel. And there's a few others that are coming out as well focused on that piece, I mentioned the first movers coalition. So really trying to get sort of groups together to say what does that demand look like rather on an individual customer basis, but it's still very early days.

Janelle Morrison from Osvelle Investment Management. This is a very specific modern slavery question. Does BlueScope source pig iron or have any exposure to that? And I guess, yes, if there's any assessment on that, too?

To Andrew? Do you want to have a first go do you want me to bring. Yes. So we've actually got Andrew Watson in the room who sits in our supply chain team. So I might bring Andrew up to respond if you're comfortable with that, Andrew.

Thanks for the question. Yes, we do. We source Pig Iron predominantly for our EAF operations in North America at North Star. And so we've done quite extensive assessment work on that supply chain, particularly the supply chain in Brazil. Including audits on the ground audits at the pig iron manufacturing facility and also the Charcoal supply chain leading into that.

[indiscernible] And you, I was just going to say I think it's fair to say it's identified early on by us as a very high-risk area, hence, the effort that's gone into it. What's actually been interesting has been the improvement in standards that, quite frankly, we've driven as part of the work that we've required the suppliers to institute has actually put them in a position where they feel they're in a much better position to sell the product more broadly because we've given them the base to operate from. But there's a range of suppliers the awful situation in Ukraine changed the pig iron market dramatically a few years ago. And it's an area that we continue to put an enormous amount of focus on. But the team, including our own people visiting sites pretty much on an annual basis to do on the ground audits, not just relying on third parties because of the potential risk in that supply chain.

And as Mark said, there are probably a number of suppliers that fit into that category where there's quite a comprehensive approach around BlueScope employees visiting the sites, external auditors, and other forms of third-party accreditation as well.

Showcasing the depth. So I think we're going to pull people out of the audience to answer questions for you now. So -- thank you, Andrew. So I might go to another -- to a question that's come through online. So again, Dan Kang from CLSA. So great progress on lowering our steelmaking emissions. Surprising to see our 2030 target is sort of incremental of 4% from where we are today. So given the introduction of the New Zealand EAF and potential debottlenecking, in terms of increase. So can you give some commentary on this sort of the forward-looking. Maybe Gretta.

Yes. And thank you for the compliment. We're very poised with how we're going with those emissions reductions. When we set that target of 1% year-on-year, we said it in 2019 to a 2018 baseline. It's fair to say that a lot of the improvements that we now have on the books didn't exist, and it was felt to be a very stretching target that would require a lot of effort. The North Star project has not been inconsiderable, we've spent an enormous amount of money and we're still ramping that one up. And now we have 2 more great projects. So our 12% target that at the time seemed like it was going to be a real stretch, but we've set it at an achievable level. We certainly now see that, that's in sight with a couple of these other projects on the book. But we're not in the business of resetting our targets on a yearly basis. And having 2 good projects on the list are doesn't mean that they're executed yet. So we now have to apply ourselves to the hard work of actually executing on the EAF and the North Star debottlenecking.

Thanks, Gretta. Any other questions on the floor.

Just a question on your safety. It seems that you're leading targets sort of looking great, but your lagging targets are still not improving. And I'm just wondering, are your leading targets that you're setting your HSE risk projects. Are you not ambitious enough in that area, and that's potentially why your lagging targets aren't coming down? And the second question is, are you -- we've seen no TRIFR in the severity. What about your high potential injury -- high potential incidents as well? Is that -- how is that coming through?

Yes, I think in response to your first question, thank you for the question. I think that I think we know it's going to take some time. So -- but by focusing on those leading indicators, and I think really as I sort of mentioned, getting that ground swell of support from our frontline workers and getting their engagement in involvement. They are the people who are going to tell us what's really needed and what the real risk is and the things that they confront every day. So I think we believe, right? We believe it will drive improvement and -- but it will take some time. And your second question sorry, again? Yes. So on the slide, we do reference there was 2 injuries. So 2 TRIs last year, which did result in permanent incapacity of those employees. So we do track those measures. And I think it's probably more realistic to see I think we'd be focused on those as a lagging indicator as opposed to the TRIFR number. That's really the consequences that we want to reduce and eliminate in our business, they're the ones that we really are focused on. To be fair to Mike, he's been in the role for 3 weeks. 6 sorry, just a couple of other comments to maybe round it out. I mean we're incredibly uncomfortable with where our TRIFR performance is. We're seeing a reduction in severity, although we still have severe incidents, but we're seeing a reduction in severity, something like 60% of the TRIFR statistics you see happen between the shoulder and the hand the manual handling injuries, their lacerations, their sprains and strains. That's something that's going to take us some time to work out of the business because it goes to automation and different ways of doing things. So the lag indicators give us great angst and we're not comfortable with them, but there's not a quick fix. And we're also seeing the risk profile change in our business. For those that were with us in May in North America. We've introduced a whole new set of risks with the acquisition of the recycling business. I mean a fabulous acquisition from us from a strategic perspective. But it's introduced a whole new range of risks and businesses that aren't anywhere near up the maturity curve that the rest of our businesses are. So this is an ongoing battle. I wish I could say to you that I can see victory in sight or we can declare victory, not the case. It's an ongoing battle and just something we just have to keep working at and rightly be questioned about our performance and our aspiration.

Thanks, Mike and Mark. I think we have another question over here.

So for Kerri, I think on the slide around the Malaysia audit. The last bullet point was addressing supply ones kind of menacing like to -- so what does that mean? And can you push change through that channel, given the kind of ASEAN more broadly issue, let's call it? And have you had success there?

Yes. Excellent question. And I'll start now just so I don't drop Andrew in straight away, but I will invite Andrew as our Head of Procurement to also comment. But we try to work as closely as we possibly can with suppliers even when we find difficulties and issues that we have to deal with. Some suppliers when they're prepared to actually work with us and to improve their business model to benefit all of their workforce, then we absolutely support them to do that. And that's always our preferred option. Obviously, if you've got suppliers that are not prepared to work with you or to give you the transparency that we want to see in the improvement, then that's a different conversation. But our first starting point is always to work as closely as we can with suppliers to get them to step up. So we're having an impact not only on our business but actually on the broader ecosystem that's operating. But yes, Andrew, is there anything else that you'd like to say for that?

Nothing to add. That's spot on. And sorry, in Malaysia, we had. One thing to add. We actually had 3 quite different responses in 2 to -- from 3 different suppliers. So one was very engaged and interested in the findings realized that they would -- that improving on that would have a positive impact on their business as well. And we're having wrapped quick to implement change. Second supplier, there were a lot more findings. It was the security supply that Kerri mentioned. That was quite a process to work through. And as Kerri said, working through that and identifying a business model that allows them to deliver a sustainable and human rights kind of centered approach is, hopefully, we think sort of not just impact on our relationship with them and our ability to continue, but also their ability to provide that service to other customers in Malaysia in the future. And then the third supplier not really interested in the findings, I couldn't see that there was any benefit for them in changing the way they were working. And we probably won't be working with them in the future.

Thanks again, Andrew. We should have gotten you a seat, I think. Kerri, I might stay with you. We've got a question that's come through online from Maddy Dry from Paradise. So on the case study within the modern slavery statement and the way that we've articulated. So Matt's question says there's sort of deliberate language around what we've used to describe the process and what we found. So the language we've used is sort of around the modern slavery indicators rather than saying we have a case on slavery. So are you able to respond to Matty's question.

Yes, absolutely. So modern slavery is a really broad term that covers it. It's like saying human rights. It covers a really large number of topics, the ones I've mentioned today, but it also includes forced marriage and human trafficking and a whole bunch of other topics. So following the UNGPs, those principles that I mentioned, the best way for companies like us to identify issues and gaps in our process is actually assessing ourselves against the ILO indicators of forced labor. So I guess our use of that wording is more to actually provide technical clarification and actually more transparently, which indicators we've sort of found an example that I gave today. Is there anything else that you'd add to that, Tim?

No. But I think, as you said, we're finding more as we go through the mediation. We're working through the remediation process. So I think the best way is that, like we talked about earlier with standards, anchoring it back to definitions that are provided by others. So that's sort of the way they're working through it. Okay.

Janelle again. The [indiscernible] date came out of its final framework earlier this week. And I had to read through -- And some of the metrics in there are quite interesting and broad. Has BlueScope looked at that recently? And do you have any comments on those metrics? And is this something that you're looking to adopt as a framework to report on?

Think [indiscernible] Sue might start with that? Are you going to throw it all to me, Gretta, I think. So I mentioned standards and initiatives, and they are really important. We've obviously got the International Sustainability Standards Board coming through and working what the response to that would be -- would look like. You would have seen, I mean, through our disclosures over the last couple of years, we know what was coming, right? So the way that we've been structuring our sustainability report is picking up those key issues. Maybe we're doing an okay job but on some of those key nature-related topics like water. We don't get any questions. So you're welcome to ask questions around water, but I think we've been disclosing quite heavily on that. The [indiscernible] taking FD is really complex as anyone that sort of read through it. It is very broad. I mean I don't quote me on this, but TCFD is easy compared to FD. [indiscernible] The depth of your value chain is really, really complex. So yes, we have started looking at it, what does that mean for our business? There are others that are going out, I think, upfront on some of this and what it might mean. We're seeing many in sort of the property space. We're seeing some also on the raw materials or in the agriculture, doing a bit more in this area, but it's definitely 1 that we are engaging with, but understanding what that might look like for our business.

Tim Gerrard. Last year, there was a little bit of a discussion on the science-based targets where the steel industry wise with respect to that, and maybe where BlueScope is involved? Can you just give us a little bit of a clarification on where we are on that? And sort of a related question, pretty familiar with Scope 1, 2 and 3. Do you spend much time when you talk to your customers about helping them and maybe a scope for or avoided emissions.

So I'll start because I had the pleasure with some of our colleagues sitting on those very late phone calls with the SBTI for the Expert Advisory Group. So the process or the guidance is now out, it's public. It's been out in public out for a little while. And there was a public contract this week. Sustainability week for us has been pretty full on. If you think about an SBTI launch a sustainability report and now all of you joining us here today. So where that came out for the SBTI review was the challenge that we have is they're talking about a 1.5 degrees and what needs to be done for us to get there. So what needs to be done versus sort of how the structure that sort of stuck or the enablers are present globally. And I think that's why you're sort of seeing us talk at length today, Gretta, Mark, we've had Anna and Chris talk around what we're doing and where the enablers are present in different geographies. That is 1 of the big challenges. So there'll be different geographies that will be better placed to respond to the SBTI guidance. But I think where we're sitting at the moment is to understand what the programs we've got and then continue to stay close to how that's moving. Gretta, do you want to add anything?

Yes. I'll just comment briefly on Scope 4. I do have to say it's -- our primary attention is on Scope 1. That's where our big challenges are. But we do have some strong examples of Scope 4 where we -- particularly our co-products head out into other industries. The example was given earlier in the cement industry, where slag provides a great replacement for clinker. So that's probably one of the strongest examples and there is -- you might recall the slide to do with the blast furnace 6 reline some additional work going into improving slag granulation in that facility. So that's probably the strongest example where it's our co-products going out into other industries.

Thanks, Gretta. Now I think we're out of time now. So I might hand to Mark just as a bit of a summary for the day.

Yes. Thanks, Tim, and thank you, everybody. I appreciate you guys making the time to come down here today. The day is not over yet for those that are in the room, but I -- hopefully, what you've seen today is what we think is a very resilient Australian business, integrated Australian business. There's an enormous amount of work going on in the business. And again, for those of you that are going to join us on the tour, you'll see that at large very shortly. There's a lot of work going on around our emission strategy and how we're pursuing that here in Australia, but also globally. A really exciting opportunity for us in New Zealand with the EAF. And this is all about us creating that sustainable business going forward. And all of it's backed up in one of the earlier questions. It's very much based around our financial principles. And the fact that we have such a strong balance sheet, we've got such strong financial disciplines, actually gives us the wherewithal to take on these medium and long-term strategies and changes that we need to bring to our business. So look, a lot of information at you today. Hopefully, that's been informative and helpful. You'll get the time to -- for those of us -- those of you joining us, you get the time to talk to us on the bus as we go around the site. To those on the website. Thank you very much for your participation and interest, and I think we will close it there now. Thank you.