The global steel industry stands at a crossroads where transparency, sustainability, and consumer trust converge.  The forthcoming UN Economic Commission for Europe (UNECE) Policy Recommendation No. 49, discussed at the UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT) Plenary, is poised to significantly influence how we approach global trade transparency.

The Need for Global Trade Transparency

Transparency within supply chains offers more than just insight into the product journey; it can also provide the source and sustainability credentials that are crucial for meeting both regulatory compliance and consumer expectations. In the steel industry, where the environmental impact and material quality are paramount, embracing transparency is no longer an option but a requirement for a well-functioning global market.

The UNECE's Recommendation No. 49, titled "Transparency at Scale", aims to establish a scalable framework for supply chain transparency applicable across various ESG criteria. This initiative aligns with several UN Sustainable Development Goals, including responsible consumption and production, inclusive economic growth, and fostering partnerships to achieve these goals.

Implications for the Australian steel sector

For the Australian steel sector, adopting the standards set out in this recommendation could redefine market dynamics by elevating the value of genuinely sustainable products.  The Standards are looking to ensure that any unsustainable practices through the global steel industry, amongst other industries, are discouraged, named and shamed, and penalised, in an effort to level the playing field.

Consumer expectations and market dynamics

With consumer, investor, employee and regulatory audiences increasingly focused on ESG aligned products and services, the success of many businesses through the global supply chain relies on not only adhering to these expectations but to taking an active role in driving them. In Australia, where environmental issues like resource management and energy efficiency are particularly pressing, this consumer and end user sentiment is already driving significant changes in industry practices.

However, the challenge remains: how to ensure that sustainability claims are credible and not just corporate greenwashing? The proposed UN Transparency Protocol (UNTP) introduces a systematic way to address this through digital product passports, product identifiers, and accreditation information, ensuring that sustainability claims are verifiable and transparent.

UNTP: A game changer for the steel industry

The UNTP’s decentralised architecture allows businesses to maintain control over their data while making essential information accessible across the supply chain. The UNTP is not a platform, rather it is a protocol that allows organisations to share data from their existing systems. This approach is particularly beneficial for the steel industry, where diverse and complex supply chains can often obscure critical data. By adopting the UNTP, the industry can move towards a more integrated and transparent system, making it easier to verify claims and build consumer and end user trust.

Addressing ESG compliance and greenwashing

The UNTP is designed not to complicate compliance with ESG standards but to simplify it. This is crucial for the steel industry, where the cost and complexity of demonstrating compliance can deter businesses from adopting sustainable practices. By providing a clear and cost-effective way to manage ESG data and claims, the UNTP can help steel manufacturers focus more on implementing sustainable practices rather than merely proving them.

Future outlook

As we look towards implementing these new protocols, the worldwide steel industry must prepare to adapt to these changes. This means continuing to invest in new technologies, training staff, and most importantly, engaging in ongoing dialogue with global partners to ensure that practices align with international standards. The promise of the UNTP is not just in enhancing transparency but in supporting a more sustainable and equitable global trade system.