New research shows aluminium could be the key to a just climate transition

The World Benchmarking Alliance's (WBA) first Heavy Industries Benchmark, published on April 30, 2024, reveals that the companies' emissions intensity reductions are currently not aligned with a 1.5-degree trajectory, there is not yet enough investment in market-ready technologies, but good practice provides hope that robust transition planning is possible throughout the sectors.

The World Benchmarking Alliance assessed and ranked 91 influential companies globally – 12 in aluminium, 34 in cement, and 45 in steel production, including Cemex, ArcelorMittal, Holcim, Chalco and Rio Tinto.

The heavy industry sectors of aluminium, cement, and steel are critical to the world's decarbonisation journey. They deliver the materials necessary for a transition to a more sustainable future. From electric vehicles to new homes to wind turbines and solar panels, the demand for production from heavy industries will continue to grow in the next decade.

Companies need to triple their current emission intensity reduction in the next 5 years to align with 1.5 degrees, 24 per cent disclose expenditure in low-carbon technologies and 50 per cent score 0 on just transition indicators. WBA is calling for the heavy industries to show leadership and take urgent action to support a just, low-carbon future. Policymakers, investors and other stakeholders must join the movement and hold these companies accountable.

Yet, to meet decarbonisation goals, manufacturers and suppliers of these materials cannot maintain business as usual, as they are currently responsible for emissions representing 18 per cent of global CO₂, and just the 91 assessed companies were responsible for 7 per cent of global energy-related emissions in 2022.

Vicky Sins, World Benchmarking Alliance's Decarbonisation and Energy Transformation Lead said, "Heavy industries provide a massive opportunity to help us reach and 'cement' a rapid, just transition – but if the sector does not accelerate action, they will be a significant obstacle to global decarbonisation targets. We need strong accountability, leadership and urgent action from aluminium, cement, and steel producers to ensure a just, low-carbon future."

WBA's research found that company emissions intensities need to fall three times faster in the next five years to align with a 1.5 trajectory. If these reductions are not reached by 2030, the need for more market-ready technologies will be even more critical.

The assessed subsectors have new and innovative technologies available that can lead companies towards a low-carbon future, but investments in R&D for market-ready technologies are insufficient. Of the companies assessed, 24 per cent disclose R&D expenditures in low-carbon technologies and just 10 per cent in non-mature technologies.

To ensure decarbonisation doesn't stop with them, companies should be collectively building the foundation for transition planning. The results found that good practice was observed across the sector, with 28 per cent of companies having transition plans that encompass all business units/operations, 13 per cent covering the entire company's value chain, 23 per cent incorporating a carbon price calculation, and 8 per cent aligning with low-carbon scenarios. This highlights that these sectors can elevate standards for key players and assist laggards to join the rest.

WBA also assessed the 91 companies' social impact and transition efforts. As for the latter, results show most companies are not needed to support a just transition. The highest scorer got only half the available points; companies scored less than 5 per cent on average. This highlights the urgent need for improvement, though top performers prove a just transition is possible across the sectors.

The need for just transition plans is more important than ever, with people and communities impacted by heavy industries from employment to health. More than 2.9 million workers were directly employed across the companies we assessed in 2022. Yet, companies are still showing a widespread lack of dedication and initiative when it comes to conducting basic, responsible business. Less than 45 per cent of all companies we assessed have committed to respecting human rights, and half (55.4 per cent) are committed to protecting the health and safety of their workers.

Overall, these sectors underline the dual role of heavy industries as both delivering the material production crucial for the transition but also as the industries in which emissions are particularly hard to abate. Long investment cycles of typically 40 years mean that facilities in place today will likely remain emitting well past 2050.

The aluminium sector plays a crucial role in supplying battery enclosures for electric vehicles, charging stations and infrastructure, and power transmission lines.

South32 achieves half the points available for just transition and is the best performer of the evaluated aluminium industries. Only Arconic and Norsk Hydro have current emissions intensity reductions in line with the company's 1.5 pathway.