Sustainability Report

All reports:  2016 | 2015 | 2014

Fiscal Year 2016

How We View Sustainability

Scope 1 GHGs
133,752 mtCO2e  3%

Scope 2 GHGs
41,057 mtCO2e       46%

Energy Use
2,891,855 GJ     11%

Water
1,095,648 m3    15%

Landfilled Waste
1% of total processed volume

TCIR
3.9 3%

DART Rate
2.2 20%

LTIR
0.9 24%

(% change from fiscal year 2015)

Tamara Lundgren

Tamara Lundgren
President and CEO

We are proud to present our third annual Sustainability Report which covers our fiscal year 2016. Sustainability is at the core of Schnitzer Steel. Founded in 1906, Schnitzer is one of North America's largest metals recyclers and a manufacturer of finished steel. Our automotive and metals recycling business processes scrap metals for reuse by steel mills and other manufacturers globally. Our integrated platform also includes a steel mill which produces finished steel products from our recycled metal, conserving natural resources, and reducing greenhouse gas emissions.

We strive to set the standard in safe and sustainable practices for the metals recycling industry while pioneering advanced technologies and processes. Our goals are to generate profitable, sustainable growth and to promote the competitiveness of recycled metal as a raw material for infrastructure, industrial manufacturing activity, and commercial construction. By continuously investing in innovation, safety, and environmental stewardship, as well as collaborating with industry and trade associations to share best practices, we are raising the profile of our industry as a sustainable business while fostering a highly talented workforce for today and tomorrow.

We exemplify our commitment to sustainability in how we conduct our operations and how we work with our customers, suppliers, and local communities to realize the benefits of recycling. Our achievements reflect a wide scope of shared successes with our customers, suppliers and communities in which we operate:

  • In California, we participated in the recycling of over 35,000 tons of metal from the iconic San Francisco-Oakland Bay Bridge and Candlestick Park, helping to make what was old new again
  • Since 2009, we have supported the Boston Police Department and 15 other local police departments by recycling the metal from more than 8,000 weapons taken off the streets
  • Since 2008, Schnitzer has participated in the national Fishing for Energy initiative, a project that has recycled more than 2 million pounds of commercial fishing gear recovered from ocean debris in partnership with the National Oceanic and Atmospheric Administration and the National Fish and Wildlife Foundation
  • In 2017, Schnitzer was named a World's Most Ethical Company by the Ethisphere Institute for the third consecutive year, recognizing our leadership in ethics, compliance, and corporate citizenship

Through sustainable practices and our commitment to positively impact the communities in which we operate, we are continuing to pioneer ways in which to further advance sustainability, recycling and environmental stewardship.

Alongside our environmental achievements, we remain committed to our culture of safety. Corporate culture plays a key role in determining how decisions are made to achieve goals. In our operations, trained and engaged employees drive our performance. In 2016, we improved our safety metrics by fostering a collaborative team effort including training, audits, robust reporting of near-miss incidents, corrective actions and layered safety observations. We are continuously improving our development and implementation of accident prevention programs and reinforcing a daily mind-set of safety among our employees.

Our sustainability key performance indicators (KPIs) have been selected to align with internationally recognized standards, and the metrics we are reporting have been assured by independent analysis.

Our Sustainability Report focuses on:

  • Environmental Performance
  • Employee Health and Safety
  • Ethics and Compliance
  • Community Alliance

For over a century at Schnitzer, we have been creating value from recycling. Through sustainable practices and our commitment to positively impact the communities in which we operate, we are continuing to pioneer ways in which to further advance sustainability, recycling and environmental stewardship.


Tamara L. Lundgren
President and Chief Executive Officer

Environment

Recycling is one of the most efficient ways to protect the environment. Steel and other metal products naturally enable resource conservation through their durability and recyclability. We manage the scrap metal we collect, process and recycle not as a waste product but as a value-added commodity. Recycling metals has substantial environmental, economic and social value. Each year, more steel is recycled than paper, aluminum, plastic and glass combined. Using recycled scrap steel in steel manufacturing saves up to 65% in primary energy input and reduces water use up to 91% as compared with processes using newly mined iron ore. Additionally, steel manufacturing using scrap steel generates up to 92% less waste.

At Schnitzer, our recycling research has pioneered such innovations as advanced nonferrous metal recovery technology to increase the amount of metal we divert from the waste stream and stormwater treatment systems to protect waterways. In fiscal 2016, we initiated the installation of new technologies for stormwater treatment at seven of our operating facilities.

In addition to our operational efficiency, we put our technologies to work in the environment with projects such as:

Truck Fleet CO2 Reduction
(pounds)

Operational excellence is a continuous improvement challenge that encourages constant collaboration across our Company. One ongoing project illustrates our focus on sustainable innovation and collaboration: the installation of EcoPro's Ultraburn Combustion Catalyst Systems and HEPO Oil Bypass Filtration Systems in our truck fleet. The goals of this project were to improve air quality, conserve finite natural resources, and deliver cost savings. Schnitzer began installing these advanced systems in 2011, outfitting both on-road trucks and off-road equipment. Through fiscal 2016, we estimate that the project has resulted in the avoidance of approximately 18 million pounds of carbon dioxide emissions, conserved more than 790,035 gallons of fuel, and reduced operating expenses by approximately $3 million. Sustainability initiatives will continue to support our operational success for many years to come.

Employee Health & Safety

Power by Safety ISRI Circle of Safety Excellence

Schnitzer's goal is to create an injury-free workplace. Each and every day, regardless of job function, all employees have a common responsibility for workplace safety. Our safety culture is a cornerstone of our success, benefiting our employees, customers, and suppliers while supporting our operational efficiency and performance. We are proud to be a founding member in ISRI's Circle of Safety Excellence for benchmarking and setting safety standards for our industry. Our program utilizes a robust safety scorecard focused on leading indicators – training, audits, near-miss incidents, corrective actions, and layered safety observations. We track and report aggregate results across our platform on a weekly, quarterly, and annual basis. By focusing on early warning signals, we can reduce overall incidents and prevent more severe incidents. Externally, we benchmark against our peer group and industry standard metrics. In fiscal 2016, we continued to aim for the highest standards for our safety performance. Compared to the prior fiscal year, we improved in every measure:

  • 87% of our facilities operated without a lost time injury in 2016
  • LTIR = Lost Time Incident Rate (incidents per 200,000 work hours) improved 24%
  • DART Rate = Days Away, Restricted and Transferred improved 20%

We are pleased with these positive results but our goal will always be zero injuries at every location. To achieve such an exceptional goal takes a very broad view. At Schnitzer, safety management is not proprietary. We actively collaborate with other industry leaders on best practices, reporting standards, benchmarks, and increasing the dialogue on ways to prevent life-altering incidents more effectively. Our safety engagement strategy connects us all by our actions, from home to work and everywhere in between.

Health & Safety Incident Rates

Ethics and Compliance

Integrity is a core value of our Company and we treat employees, customers, suppliers, the public, and investors with respect and fairness. Our Directors, the Executive Team, and each and every employee is responsible for adhering to our Code of Conduct, all applicable laws and regulations, and maintaining our high standards of ethical behavior and business practices. Simply stated, everyone on the Schnitzer team is expected to do the right thing every day as we serve our customers, business partners, investors, and communities.

Schnitzer maintains a robust and effective Corporate Compliance Program, led by our Chief Compliance Officer, which focuses on:

  • Ethics – Compliance with our Code of Conduct, communication and education on making ethical decisions, and fostering an environment where employees feel free to report concerns, including through our whistleblower hotline.
  • Anticorruption – Risk assessment and management tools to ensure strict adherence to anticorruption and anti-bribery laws and regulations, including through maintaining adequate books and records.

In 2017 and for the third consecutive year, Schnitzer was named a World's Most Ethical Company by the Ethisphere Institute, an international think tank focused on ethics and compliance. This prestigious award is given exclusively to companies that have a material impact on the way business is conducted by fostering a culture of ethics and transparency at every level of the company. Specifically, winners must demonstrate leadership in five key categories: ethics and compliance; corporate citizenship and responsibility; culture of ethics; governance; and leadership, innovation, and reputation. Only 124 companies worldwide were honored in 2017. Schnitzer is the only metals recycling company to be among the winners.

Community Alliance

At Schnitzer, our people are our passion. Our employees are dedicated to operational excellence and to the communities in which we live. Our employees pioneer and support many efforts to contribute to local communities through their direct involvement in community initiatives and participation in numerous charitable organizations. Some examples include:

  • Earth Day – In April 2017, Schnitzer participated in the global celebration of Earth Day. This year it was estimated that more than one billion people participated in Earth Day events from 196 countries, making it the largest civic observance in the world.
    • Pick-n-Pull hosted a national "REuse and REcycle" campaign sharing Do-It-Yourself repair procedures, easy replacement alternatives, and maintenance techniques through YouTube videos, infographics, and online community narratives.
    • Metals Recycling locations partnered with local public works departments to aid recycling efforts, participated in community beautification projects, and sponsored classroom recycling education in partnership with EarthDay.org.
    • Cascade Steel Rolling Mill provided a free scrap drop for discarded metals and redundant electronics for the local community, partnering with the local Chamber of Commerce, Recology Western Oregon, and a local Boy Scout Troop, and provided reusable tote bags in exchange for recycling plastic grocery bags, cans and plastic bottles.
  • Food Bank Drive – Through our national campaign, Racing To Stop Hunger, Schnitzer employees across all regions and divisions donate non-perishable food items as well as their time to help put food on peoples' tables and support local food banks.
  • Gun Destruction – Since 2009, we have supported the Boston Police Department and 15 other local police departments by recycling the metal from more than 8,000 weapons taken off the streets.
  • Ocean Clean Up – Since 2008, Schnitzer has participated in the national Fishing for Energy initiative, a project that has recycled more than 2 million pounds of commercial fishing gear recovered from ocean debris in partnership with the National Oceanic and Atmospheric Administration and the National Fish and Wildlife Foundation.
  • Scrap Drive – This Schnitzer program allows non-profit organizations to raise money by collecting scrap metal which we then purchase for recycling.

Our employees reflect a diverse cultural background and a welcoming opportunity for anyone interested in working for a purpose:

By The Numbers

In our fiscal year 2016 Sustainability Report, we present our environmental footprint across our enterprise. These metrics provide insight into our environmental performance – but in practice every aspect of our operations is focused on resource recovery, recycling, and reuse. Our metals recycling facilities divert steel and other metals from landfills by processing 3.3 million tons of ferrous and 510 million pounds of nonferrous metal annually into raw material for new products. Our auto parts stores recycled 319,000 cars in fiscal 2016, reducing the need to manufacture new parts by providing affordable used auto parts to consumers across the U.S. and Canada. Our steel manufacturing facility produces up to 580,000 tons of new steel annually from recycled metals.

Our sustainability key performance indicators focus on carbon emissions disclosures, energy management, and efficiency, water conservation and quality, resource recovery, and waste diversion.

Our 2016 fiscal year (September 1, 2015 through August 31, 2016) represents our third annual year for public disclosure of Scope 1 and 2 greenhouse gas emissions, water consumption, and waste generation.

Our results are independently assured by Trucost, a global leader in environmental data analytics in partnership with S&P Dow Jones Indices. Trucost assesses inclusivity, materiality, and accuracy of the data, estimates, and conversion ratios in adherence with the Global Reporting Initiative (GRI) and the United Nations Global Compact Principles (UN Global Compact). The GRI provides the world's most widely used standards on sustainability reporting and is inclusive of an adherence to the UN Global Compact. The UN Global Compact is a voluntary leadership platform for the development, implementation, and disclosure of responsible corporate policies and practices. Launched in 2000, the UN Global Compact is the largest corporate sustainability initiative in the world, with over 12,000 signatories based in 145 countries.

Carbon Emissions

Schnitzer's direct (Scope 1) emissions largely result from our consumption of diesel fuel in on-road transportation fleets and off-road production equipment, our consumption of natural gas in steel manufacturing, and carbon emissions inherent in the steel manufacturing process. Efforts to minimize these emissions are ongoing, often through the retirement of older equipment and the installation of technologies which conserve fuel and/or reduce emissions.

Schnitzer's indirect (Scope 2) emissions result solely from our use of grid-purchased electricity. Electricity demand is highest at our steel manufacturing facility which utilizes an electric arc furnace. However, this operation, based in McMinnville, Oregon, utilizes grid electricity generated from 86% renewable energy sources, primarily hydro-power generation, which results in total company energy usage of 73% hydro-power generation. Ongoing efforts to minimize Scope 2 emissions include installing on-site electrical substations at our shredder facilities, retrofitting and redesigning our facilities' lighting systems, and using more energy-efficient electrical motors and other equipment. Our metals recycling facilities and auto parts retail and dismantling facilities have small building footprints. Scope 2 emissions generated from electricity usage by these facilities include office and security lighting systems, building heating and cooling systems, and computer systems. These systems provide a safe, secure, and productive environment for our employees and visitors.

Energy Usage

Sources of Electricity
Used by Schnitzer

In fiscal 2016, Schnitzer's energy usage totaled 2.89 million gigajoules of energy, at a 1.22 to 1 ratio between fossil fuel consumption and electricity usage. This reflects an 11% decrease in energy use compared to the prior fiscal year, primarily driven by the retirement of older equipment and the installation of technologies which conserve fuel and/or reduce emissions. Our fossil fuel consumption is 59% natural gas, 36% conventional gasoline and diesel fuel and 5% alternative bio-fuels. Approximately 76% of our electricity comes from renewable energy sources such as hydroelectric, wind, solar, biomass, and geothermal.

Fuel conservation and electricity efficiency is a priority for Schnitzer. We have implemented creative solutions to save energy at many of our facilities. Some of these have included diesel-engine combustion catalyst systems, variable frequency drives, electrical motor efficiencies, on-site renewable energy technologies, upgrades/retrofits to building envelopes and lighting systems, and on-road transportation fleet tracking systems. Meanwhile, we are constantly developing new solutions to conserve more energy.

We recognize that through efficient energy usage and conservation efforts, we can extend the useful life of energy consuming assets, minimize maintenance and new equipment purchasing costs, and better manage risks associated with volatile fossil fuel and electricity prices. Our energy usage strategy is a collaborative effort across the organization involving each business segment and all business activities.

Water Usage

Ensuring water efficiency in our operations is central to our water quality and conservation efforts.

At our metals recycling facilities, water usage demands are concentrated on the cooling needs of our mega-shredders and dust suppression. Efforts to improve the water use efficiency of the metal shredding process are ongoing and include: directing flow nozzles and sprinklers to eliminate overspray; recycling and re-use of overspray from around metal shredding areas; and the collection and harvesting of rainwater as a substitute for fresh water and well water resources.

Water usage in our steel mill accounts for approximately 70% of the water usage across our Company. However, municipal water supply represents only 2% of the facility's total water usage due to state-of-the-art water recycling capabilities. Water usage is negligible at our metals recycling collection facilities and auto parts stores. Nevertheless, we are fully engaged in eliminating wasteful water usage whenever feasible. Water reusage at our facilities encompasses environmental best practices, such as reducing dust from roads, trucks, and stockpiles. Wastewater and rainwater are collected, stored, and reused where feasible. Storefront landscape and irrigation systems are closely monitored for malfunctions and overwatering, particularly in times of severe drought. We initiated a significant capital project in fiscal 2015 to implement an innovative, large-scale stormwater treatment program at our Everett, Massachusetts shredder and port facility which will be completed in 2017. We installed a total of seven advanced stormwater systems in our major operating facilities during fiscal 2016.

METALS RECYCLING PROCESS

  1. Fluids and hazardous materials are removed. Reusable parts are removed and reused.
  2. Cars, appliances, and other salvage material are shredded into fist-sized pieces. Scrap is separated into ferrous and nonferrous metals and other materials.
  3. Ferrous metal scrap is melted in furnace at over 3000° F and then re-formed / cut into new finished steel products.
  4. Recycled steel is used in new buildings, bridges, cars, appliances, containers — wherever steel is used.

To see our recycling process in action, click here.

Waste Handling

By weight, nearly all of the materials processed by our metals recycling facilities are recycled. Only 1% of our total processed materials are directly disposed of in landfills. The majority of generated landfilled waste comes in the form of shredder residue, the output of our shredding practices. The typical composition of shredder residue is similar to municipal solid waste (trash) – small pieces of plastic, foam, fabric, rubber, glass, wood, paper, residual metals, soil, gravel, and rocks.

Our steel manufacturing facility recycles more than just steel. Our robust recycling program includes commonly co-mingled recyclables, paper and cardboard, wood pallets, batteries and electronics, paints and solvents, and print toner cartridges just to name a few.

Our Pick-n-Pull auto parts stores drain, recover, remove, and recycle hazardous materials from the end-of-life vehicles (ELV) they procure. These vehicles often come littered with household trash and non-reusable consumer products discarded by prior owners. Our facilities carefully sort all of these materials, re-using and recycling where feasible and properly disposing of what remains.