IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.
PS 1 - Assessment and Management of Environmental and Social Risks and Impacts
The Group’s Environmental Management System (EMS) covers 115 production companies and sites worldwide, including all facilities in IFC’s countries of interest for this Project – Romania, Poland and Brazil. It covers steel producing and processing business segments that are relevant to the Group’s carbon footprint. There are Group, Divisional and Country level environmental management systems/teams. There are country-level systems and teams in all facilities in Poland, Romania and Brazil.
The majority of the Group’s production sites (82 percent), which account for 97 percent of the total production volume, have an ISO 14001 certified or EMAS-accredited Environmental Management System (EMS), including the facilities included in the review by IFC, while 30 percent of the companies are subject to certified energy management in accordance with ISO 50001.
The EMS is rolled out and implemented at the production facilities visited by IFC, with adequate organizational capacity and competency. Emergency preparedness and response systems are also implemented at the facility level with external emergency plans.
Annual EMS audits are undertaken to uphold the ISO accreditation.
Voestalpine has established several E&S policies focused on environmental protection and occupational health and safety (OHS), defining company values and behavior principles. E&S risks and impacts associated with their operations are being managed through compliance with applicable national E&S regulations. The Voestalpine’s Code of Conduct explicitly states that the company must ensure that its business activities have no negative impact on the health, safety, and livelihoods of local communities and Indigenous Peoples. Voestalpine will review and update its Project E&S policies in line with IFC’s PS, including a commitment to adhere to relevant objectives of the PSs. In case of greenfield projects and footprint expansion during the implementation of the Project, the company will meet applicable PS requirements in terms of land acquisition, biodiversity conservation, Indigenous Peoples and cultural heritage. (ESAP #1).
PS 2 – Labor and Working Conditions
As per the annual Corporate Responsibility Report (CR) 2023/24, the Voestalpine Group has a global workforce of approximately 50,000 employees of which approximately 10,000 are employed at the site in Linz, Austria. There are 877 employees in Poland, 809 in Romania and 2,303 in Brazil. The CR also presents the data by gender. It is Voestalpine’s stated goal to increase the percentage of women on all levels, from apprentices to executives. In particular, the proportion of women in management positions is to be increased from the current 14% to 18% by 2030.
Labor and working conditions comply with national legislation. The company has human resources management policies and procedures, including a company’s Code of Conduct. Working conditions and terms of employment meet national legislation and PS2. The regulations on working hours must comply with national legislation. Employees are entitled to at least one day off per week and remunerated in accordance with the applicable legal regulations and collective agreements, and this remuneration must be sufficient to meet the basic needs of employees and their families and to provide them with a decent standard of living.
All employees of Voestalpine Group are required to complete a Human Rights e-learning course which includes training on working conditions, non-discrimination, equal opportunity and right to education.
Every Voestalpine employee has the freedom and right to join a union. Around 75% of all Voestalpine Group employees are in an employment relationship governed by a collective agreement or similar corporate agreement. The Voestalpine Group also has a European Works Council and a Group Works Council, which represent the workforce and maintain communication with management.
As stated in the Voestalpine Code of Conduct, the Group does not tolerate any form of discrimination. Voestalpine supports equal opportunities and respect and does not engage in any form of discrimination based on gender, marital status or parenthood, ethnicity or nationality, age, disability, sexual orientation, religion, or other personal characteristics. The requirement to respect others also applies to sexual harassment in any form. The Voestalpine’s ‘reporting misconduct’ webpage states that reports on discrimination and sexual harassment can be submitted via various channels, including the Group Compliance Officer, the Human Rights Officer, the Company HR department, the Group Data Protection Manager and the web-based whistleblower system. Voestalpine strictly rejects any form of child labor and does not tolerate any form of forced or compulsory labor, human trafficking, or modern slavery. Both the Voestalpine Code of Conduct and the Code of Conduct for Business Partners explicitly mention and expressly prohibit human trafficking and modern slavery.
Voestalpine has a set of H&S values and a target of zero workplace accidents and no occupational illnesses. All Voestalpine’s production companies have a H&S management system, and 76 percent of them are certified to ISO 45001 or an equivalent, national H&S standard. The company has a Group’s Health and Safety Unit, which reports directly to one of the members of the Management Board. There is also a H&S Committee, made up of employees from the company’s four divisions and the Works Council representatives, who work collaboratively to lower the Lost Time Injury Frequency Rate (LTIFR), which has been reduced by approximately 50 percent Group-wide, since the department was established five years ago. In 2023/24, the LTIFR was reported to be 7.4, consisting of three sick days per one million hours of work performed. Workplace accidents are recorded and reported (ref. CSR Report 2023/24). Accident reports are inputted into a centralized database, with data analyzed and submitted to the relevant authorities as required. Corrective actions are implemented where necessary.
All suppliers (including raw material suppliers) are expected to adhere to the company’s E&S standards. In 2016, the company commenced a Sustainable Supply Chain Management (SSCM) project, analyzing materials, countries of origin and suppliers according to economic, environmental and social criteria, as well as compliance with human rights. The company created a heat map from the analyses, showing the risks in the supply chain, which is updated every five years. As part of the company’s SSCM, suppliers are evaluated in a targeted fashion with respect to compliance with human rights and, specifically, the prohibition of child, forced, and compulsory labor. In the event of violations, Voestalpine takes appropriate measures that may ultimately lead to the suspension or termination of the supply relationship. Voestalpine uses checklists, questionnaires and on-site visits to assess how suppliers rate against the company’s defined sustainability criteria, which cover sustainability aspects, including human rights, environmental impacts, compliance and occupational safety. Special rules apply to certain suppliers of raw material such as tin, tantalum, tungsten, and gold that originate from conflict regions. When the company purchases such materials, a special Conflict Minerals Report needs to be submitted by the smelting plants and refineries. Raw material suppliers are evaluated once per year and subsequently rated, and where gaps are found, corrective actions are developed, giving one year to the supplier for implementation.
The company is guided by the UN Global Compact, the Sustainable Development Goals, Dodd-Frank Act and the Conflict Minerals Regulation. The company also follows the principles of the German Supply Chain Due Diligence Act. The Linz site is also ResponsibleSteel certified.
PS 3: Resources Efficiency and Pollution Prevention
The project is targeted towards the reduction of carbon emissions, through a combination of technical measures, such as replacing the blast furnaces with electric arc furnaces, the production of “green’ steel and energy efficiency measures.
Voestalpine's greenhouse gas (GHG) emissions (2023 calendar year) for Scope 1 and 2 GHG emissions were estimated at approximately 13 million tCO2e/year, with the majority originating from the Austrian steel production facilities. The eligible projects identified in Brazil, Poland and Romania will contribute to the achievement of Voestalpine’s 2029 decarbonization target, which involves a 4 million tCO2e/year reduction in Scope 1 and 2 emissions and a 2.3 million tCO2e/year reduction in Scope 3 emissions. This represents a reduction in Scope 1 and 2 emissions of 30% and Scope 3 emissions of 25% by 2029, compared to a baseline level of 2019. The company plans to be climate neutral by 2050. The project is pursuing measures to GHG emissions as part of the design and operation of the eligible projects that align with the EU Taxonomy for Sustainable Activities including with respect to manufacturing low-carbon steel (building new electric arc furnaces, using state-of-the art technologies, and leveraging captive renewable power as part of decarbonization R&D and implementation), and enhancing low emission, clean transportation related to associated railway development.
The use of water resources is reduced by means of circulation systems and multiple use of process water. In keeping with ISO 14046 and the integrated LCA approach, assessments of the water circulation systems are performed across all production steps and sites.
With regard to other sources of environmental impact, e.g. air emissions, wastewater, waste, noise emissions, these are minimized through strict compliance with statutory and regulatory requirements. Compliance with these requirements is ensured and continuously monitored by Voestalpine’s EMS.
The company prepares detailed climate risk and vulnerability analyses for all relevant operating sites to determine their resilience to physical risks associated with climate change (e.g., water stress has been assessed as a future risk factor at Tychy) and adaptation opportunities.
PS 4: Community Health, Safety, and Security
Voestalpine is committed to the UN Sustainable Development Goals. Goals 3, 11 and 17 relate to health and livelihoods and promote the well-being of all, as well as relationships with key local stakeholders and the social, cultural and environmental issues of the communities in which they operate. Voestalpine is committed to a shared set of values and aims to improve the lives of people in the areas surrounding its sites, including community health, safety and security. In addition, voestalpine's Code of Conduct addresses the importance of local communities and indigenous peoples, and voestalpine expects all employees to support local communities and indigenous peoples in the vicinity of voestalpine Group companies and its contractors. In particular, voestalpine must ensure that its business activities do not have a negative impact on the health, safety and livelihoods of local communities and indigenous peoples. Moreover, Voestalpine is committed to further developing its policies on these and related issues in its Code of Conduct, which is updated on a regular basis.
Procedures for emergency preparedness and response and for life and fire safety are in place and are in compliance with the respective national regulations.
Voestalpine AG’s Human Rights Policy has a section on human rights training for security personnel. Voestalpine’s plant security staff are largely comprised of the company’s own employees, who are subject to the Group’s Code of Conduct. Where third party personnel are engaged, they are subject to the Code of Conduct for Business Partners. Both documents mandate compliance with human rights.
