SBTi Launches First 1.5C Science-Based Decarbonisation Guidance for Global Steel Sector

The Science Based Targets initiative released the world's first science-based decarbonisation framework for iron and steelmakers, requiring direct emissions to fall by more than 91% by 2050 relative to 2021 levels. The Steel Science-Based Target-Setting Guidance covers the full steel value chain and was developed in collaboration with the Energy Transitions Commission.

Steel accounts for up to 9% of global GHG emissions and is a foundational material for manufacturing, construction, infrastructure, renewable energy technology and transportation. The guidance provides near- and long-term emission reduction pathways for primary and secondary iron and steelmakers, companies in the value chain such as iron ore suppliers and downstream purchasers, and financial institutions. Over 20 steel companies had validated near-term science-based targets at the time of the guidance launch, with 27 more committed — including 19 net-zero commitments.

The guidance takes into account sector-specific constraints including future global steel demand trajectories, data limitations, technology access and steel scrap availability. A study cited by the SBTi found that 14% of the potential value of steel companies could be at risk from rising carbon prices by 2040 if the industry fails to decarbonise. For India, the world's second-largest steel producer, the guidance provides an internationally recognised framework for domestic steelmakers seeking to demonstrate climate alignment to investors and export markets.

The Steel Guidance was developed through an independent Expert Advisory Group comprising academia, civil society and business, and included a two-month public consultation. The Energy Transitions Commission co-developed the methodology as part of the Mission Possible Partnership. Ceres Director of Climate and Energy Dan Seligman noted investors now have a standard to evaluate steel companies' climate seriousness. Companies that had previously set targets were encouraged to recalculate ahead of their regular review schedules using the new guidance.

Key figure — 91% reduction in direct steel sector emissions required by 2050 versus 2021 baseline