G20 SFWG input paper: The role of policymakers in mobilising private finance to ensure a credible and just transition in steel and cement

This input paper for the G20 Sustainable Finance Working Group, prepared by the India Initiative on Climate Risks and Sustainable Finance (led by Climate Bonds Initiative), examines the role of policymakers in mobilising private finance for the decarbonisation of the steel and cement sectors. It emphasizes the critical nature of the current decade for transition, particularly in emerging markets, and argues that credible corporate transition plans are essential for unlocking private capital through instruments like sustainability-linked bonds (SLBs). The report also highlights a significant gap in the integration of 'just transition' principles within corporate planning.

• Steel and cement are the largest industrial emitters globally, accounting for over 7% and 6% of global CO2 emissions respectively in 2022. Their emission sources differ fundamentally: steel emissions primarily stem from a high reliance on coal in blast furnaces, while cement emissions are largely driven by chemical reactions during the clinker calcination process, which cannot be solved by fuel substitution alone.
• The current decade is a critical window for transition because over 70% (1091 Mt/yr) of global coal-based blast furnace capacity will require reinvestment by 2030. This presents a major opportunity to adopt lower-intensity production methods and avoid long-term carbon lock-in and stranded assets, given that asset lifetimes in these sectors often exceed 40 years.
• Emerging markets (EM) are central to the global transition as they are expected to lead the rise in demand for steel (30%) and cement (45%) by 2050. However, EM face significant financing challenges, including high costs of capital; the report notes that a 1% reduction in the cost of capital could save EM USD 150bn per year.
• Public procurement is a powerful lever for decarbonisation, as public authority purchasing power totals approximately USD 11tn annually, accounting for up to 25% of global steel demand and 40% of global cement demand.
• Credible corporate transition plans are essential for accessing private capital, particularly for sustainability-linked bonds (SLBs). Analysis shows a strong correlation between plan quality and bond alignment: 100% of steel SLBs meeting the Climate Bonds methodology were issued by companies with transition plans including an action plan, finance plan, and governance mechanism.
• An analysis of 20 companies revealed that while 90% have published some form of transition plan, there are significant weaknesses in financing disclosure and data verification. Furthermore, companies in jurisdictions with transition plan legislation are more likely to have targets and action plans aligned with science-based methodologies.
• The steel and cement sectors are in the early stages of addressing 'just transition' risks. While 40% of analyzed companies explicitly commit to a just transition and 45% refer to international frameworks like the Paris Agreement or ILO guidelines, none of the 20 companies assessed have formulated concrete objectives to achieve a just transition.

APA

Passaro, F. (2024). G20 SFWG input paper: The role of policymakers in mobilising private finance to ensure a credible and just transition in steel and cement. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/The-role-of-policymakers-in-mobilising-private-finance-to-ensure-a-credible-and-just-transition-in-steel-and-cement.pdf

Chicago

Passaro, Fabio. G20 SFWG input paper: The role of policymakers in mobilising private finance to ensure a credible and just transition in steel and cement. Climate Bonds Initiative, 2024. https://www.climatebonds.net/files/documents/publications/The-role-of-policymakers-in-mobilising-private-finance-to-ensure-a-credible-and-just-transition-in-steel-and-cement.pdf.

Wikipedia

{{cite report |last1=Passaro |first1=Fabio |title=G20 SFWG input paper: The role of policymakers in mobilising private finance to ensure a credible and just transition in steel and cement |publisher=Climate Bonds Initiative |date=July 2024 |url=https://www.climatebonds.net/files/documents/publications/The-role-of-policymakers-in-mobilising-private-finance-to-ensure-a-credible-and-just-transition-in-steel-and-cement.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{passaro2024g20, author = {Passaro, Fabio}, title = {{G20 SFWG input paper: The role of policymakers in mobilising private finance to ensure a credible and just transition in steel and cement}}, institution = {Climate Bonds Initiative}, year = {2024}, month = jul, url = {https://www.climatebonds.net/files/documents/publications/The-role-of-policymakers-in-mobilising-private-finance-to-ensure-a-credible-and-just-transition-in-steel-and-cement.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }