ESG-Driven Analysis Reveals Sustainability Gaps and Pathways for Steel Industry Across Belt and Road Nations

Comprehensive Study Evaluates Steel Sector Sustainability Using Multi-Dimensional Framework

A groundbreaking study examining the sustainability performance of steel industries across 64 Belt and Road Initiative (BRI) countries has revealed both significant progress and critical challenges in the sector’s environmental transformation. The research, published in Scientific Reports, introduces an innovative ESG-MI evaluation model that integrates environmental, social, governance, resource, and industrial dimensions to assess sustainability levels from 2000 to 2023.

The steel industry, responsible for 9% of global CO2 emissions and 7% of worldwide energy consumption, faces mounting pressure to transform its operations amid growing climate concerns. With BRI countries accounting for 75.8% of global crude steel production in 2024—equivalent to 1.43 billion tons—the region’s sustainability performance has profound implications for global carbon reduction targets.

Steady Progress Amid Regional Disparities

The comprehensive analysis demonstrates that sustainability levels across BRI steel industries have shown consistent improvement, with an average annual growth rate of 1.04% over the 23-year study period. However, the research reveals substantial disparities in development patterns and sustainability performance across different regions.

“The sustainable development of the steel industry along the BRI follows a clear geographical transmission pattern,” the study notes, identifying a progression from Europe to East Asia, then to the Middle East, Southeast Asia, and finally South Asia. This pattern highlights both the transfer of sustainable practices and the varying stages of development across different economic regions.

Drivers and Obstacles in Sustainable Transformation

The ESG-MI framework analysis identifies industrial development and governance as the primary drivers of sustainable progress in the steel sector. Countries with robust industrial policies and effective governance mechanisms demonstrated significantly better sustainability outcomes.

However, environmental performance remains the sector’s Achilles’ heel, with resource supply chains proving particularly vulnerable to external shocks. The study emphasizes that the fragility of resource networks poses significant risks to sustainable development, especially in regions dependent on imported raw materials.

Critical Barriers to Sustainable Development

Through obstacle degree modeling, researchers identified the three most significant barriers to sustainability advancement:

• Industrial value added (X20): The economic structure and value creation efficiency within the steel industry
• Crude steel output per capita (X11): Production intensity relative to population size
• Proportion of ores and metals in total exports (X12): Resource dependency and export composition

These three factors demonstrated significantly greater hindering effects than other measured indicators, suggesting that economic structure and resource management represent the most substantial challenges to sustainable transformation.

ESG Integration and Market Impact

The growing importance of Environmental, Social, and Governance (ESG) considerations in investment decisions underscores the urgency of sustainability improvements. ESG investments in major developed countries reached $35.3 trillion in 2020, representing 35.9% of total investment scale. Projections indicate this could grow to $40 trillion by 2030 as market mechanisms increasingly align with sustainability goals.

The study highlights how ESG frameworks are extending from corporate-level applications to industrial-level assessments, though standardized evaluation methodologies at the national industry level remain underdeveloped.

Corporate Initiatives and Regional Economic Context

Several steel companies in BRI countries are leading the sustainability charge through ambitious climate action plans. JSW Steel has committed to reducing CO2 emission intensity by 42% by 2030 through increased renewable energy usage, enhanced scrap steel utilization, energy efficiency improvements, and production process optimization. The company also targets 100% solid waste recycling and a 39% reduction in freshwater consumption.

The economic significance of the BRI region amplifies the importance of these sustainability efforts. With a total economic output of $36.5 trillion in 2023 and an average annual growth rate of 4.5% since 2013—1.6 times higher than non-BRI countries—the region represents one of the world’s most economically dynamic areas, home to 61.5% of the global population.

Research Methodology and Academic Context

The study builds on extensive academic research examining the relationship between ESG performance and corporate outcomes. Previous research has demonstrated that companies with stronger ESG ratings typically benefit from lower capital costs and greater investment attraction. The current research extends this understanding to industrial-level analysis, particularly crucial for high-emission sectors like steel production.

Complementing the ESG framework with steel industry-specific characteristics, the researchers developed a comprehensive evaluation model that addresses the unique challenges of assessing sustainability across diverse economic and regulatory environments.

Implications for Industry and Policy

The findings provide critical insights for policymakers, industry leaders, and investors seeking to accelerate the steel industry’s green transformation. The identification of specific obstacles enables targeted interventions, while the regional progression patterns suggest opportunities for knowledge transfer and collaborative development., as additional insights

“Understanding these dynamics is essential for designing effective policies and investment strategies that can drive meaningful sustainability improvements across the global steel industry,” the researchers conclude, emphasizing the need for coordinated action across the 64 BRI nations to address both common and region-specific challenges.

As global pressure for decarbonization intensifies and ESG considerations become increasingly central to investment decisions, this comprehensive analysis provides a crucial foundation for guiding the steel industry’s sustainable transformation in one of the world’s most economically significant regions.

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