While ArcelorMittal carefully manages its communication around the manufacture of the Olympic flame in low-carbon steel, the reality is quite different: the company continues to develop new blast furnaces, which consume metallurgical coal, betting on non-viable technologies. The banks that support the company can no longer bury their heads in the sand in the face of ArcelorMittal’s greenwashing. They must adopt robust sectoral policies to support the decarbonization of the steel sector.
BNP Paribas, Crédit Agricole, Société Générale and BPCE provided ArcelorMittal with
billion.
Made entirely from recycled steel, as its manufacturer ArcelorMittal, the world’s second-largest steelmaker, points out, the Olympic flame arrives in France tomorrow, May 8, to begin its final journey before the Olympic and Paralympic Games kick off. (1) The company, a partner of the Paris 2024 Games, is taking advantage of this media opportunity to roll out a large-scale communications operation, not hesitating to highlight its know-how and environmental exemplarity. (2)
Yet ArcelorMittal is far from the exemplary company it portrays. The steelmaker is associated with a history of human rights violations, air pollution and non-compliance with environmental standards, (3) fatal accidents, (4) all accompanied by an incomplete and insufficient climate plan. Despite this, the company enjoys the massive support of the major French banks (or nearly €12 billion) between 2016 and June 2023. (5) To date, French banks have made little or no commitment to the steel sector, responsible for 11% of global CO2 emissions. (6)
Recycled steel for the Olympic flame, coal for the rest
Although the Olympic flame is made in France from recycled steel, (7) and is therefore relatively low-carbon, (8) this is rather an exception compared to ArcelorMittal’s overall production. Indeed, the steelmaker has a higher carbon intensity than the industry average, (9) and uses coal for 71% of its production.
Globally, ArcelorMittal’s climate strategy differs considerably from the communication line of their campaign for the Paris 2024 Games. (10) The company is adopting a two-speed decarbonization, favoring green hydrogen in Europe while continuing to build coal-fired blast furnaces elsewhere. (11) To achieve this, the steelmaker relies extensively on carbon capture, utilization and sequestration (CCUS), although this technology has a long history of failure and several studies show that it will almost certainly be abandoned for steel decarbonization, as it has been in the energy sector. (12) ArcelorMittal’s plans to use this technology to continue relying on coal have already been questioned by investors. (13)
Furthermore, contrary to investor demands, (14) the company has just declared that it will not adopt decarbonization targets based on the methodology of the Science Based Target Initiative (15). ArcelorMittal is thus sending out the signal that it does not wish to have its decarbonization targets certified by this standard, even though it helped develop it. (16)
French banks must act now to decarbonize steel
French banks BNP Paribas, Crédit Agricole, Société Générale and BPCE are major supporters of ArcelorMittal.
Financing provided by French banks to ArcelorMittal between 2016 and June 2023*
| Bank | Amount in million US$ |
|---|---|
| Crédit Agricole | 4,244 |
| BNP Paribas | 3,818 |
| Société générale | 3,672 |
| BPCE | 1,021 |
* Data from financial research carried out for the report: Reclaim Finance, Steeling our future: The banks propping up coal-based steel, March 2024
While financial players have until now concentrated their climate efforts on the energy sector, there is now an urgent need to tackle the steel industry at the same time. Indeed, thanks to technological progress, particularly in the field of green hydrogen, the sector can be coal-free by the early 2040s. (17) To achieve this, the decisions taken over the next six years will be decisive. (18)
So far, apart from decarbonization targets, which are insufficient and inadequate to halt the expansion of coal-based steel projects, no French bank has adopted commitments on the steel sector. French banks urgently need to adopt sector-specific policies to restrict direct and indirect financing to new blast furnaces, their expansion and life extension.
Decarbonizing the steel sector also means halting the expansion of metallurgical coal, for which current sources are sufficient to meet demand until 2050, according to the IEA. (19) While BNP Paribas, Crédit Agricole and Société Générale have all taken a step in this direction, by extending their thermal coal policy to metallurgical coal at project level, the BPCE group, a premium partner of the Paris 2024 Games, (20) still has no commitment regarding metallurgical coal.
In fact, none of these banks has made any commitments restricting their financing to companies developing new metallurgical coal projects. However, the majority of these companies finance their operations through corporate-level financing, rather than through earmarked financing. For example, between 2016 and 2023, BPCE granted US$1.6 billion to Glencore, which develops metallurgical coal projects, notably through the acquisition of part of Teck Resources. (21) By only having policies at project level, and not at company level, BNP Paribas, Crédit Agricole and Société Générale can thus continue to finance metallurgical coal developers like Glencore, but also BHP, which may soon continue to expand its metallurgical coal production capacity. (22)
In light of ArcelorMittal’s greenwashing, Reclaim Finance calls on French banks to adopt solid commitments to support the decarbonization of the steel sector. This means adopting sector-specific policies to restrict financing to new blast furnaces, their expansion, and life extension. BNP Paribas, Crédit Agricole and Société Générale must also be more ambitious when it comes to metallurgical coal, by restricting financing to companies developing new projects. As for the Games’ premium partner, BPCE, it’s time to enter the race.
