Owning to influence – a field visit to a city engulfed in smoke

Field visits have long been a part of Nordea’s commitment to being a responsible and sustainable bank and is an integrated part of how we view ownership.
The production of steel is both CO2- and energy-intensive. In the town Zenica, seventy kilometers north-west of Sarajevo in Bosnia, the consequences for both people and the environment are tangible. To investigate the impact the company has on its environment in Zenica, Nordea decided to conduct a field visit to see the plant and its pollution for ourselves.

Located in a valley, Zenica is dominated by a huge steel plant that employs around 3,000 people. Many of the citizens are suffering from diseases, which they mean are related to the emissions, and children are not always allowed to play outside due to the pollution. 

Residents and environmental organizations have for years complained about the high levels of pollution in the city. The steel is manufactured by one of the world’s largest players in the extraction industry, ArcelorMittal, which Nordea invests in.  

“It’s a very dirty factory. It produces iron, steel, and electricity. And the dust, sulfur dioxide, and organic pollutants, benzene and heavy metals being emitted are way over the limits,” says Samir Lemes, a former president of the local environmental organization, Eko Forum, who is still very active. 

As an investor, Nordea has an opportunity to influence the company. By asking questions, raise concerns and even divest, should the conditions not improve, we can promote sustainability. 

After ArcelorMittal took over the plant in 2004, the company installed a large filter in 2013 to limit the pollution caused by the operation of the blast furnace. However, before 2013 the city and its inhabitants were exposed to extremely high levels of emissions and the residents are concerned. When speaking to Nordea, the company management acknowledges that more measures are needed to reduce the environmental impact of the steel plant. 

During the visit, Nordea emphasized that a technical solution must be designed to deal with the heavy fumes generated by scrap and hot metal being charged into the hot furnace and a hood for capturing the emission is now in the works. 

According to Katarina Hammar, Head of Responsible Investments at Nordea, these kinds of field visits are crucial to gain a deeper understanding of the conditions and challenges the companies Nordea invests in are facing.

“We believe in active ownership and in using influencing the companies we invest in to reduce their environmental impact and become more sustainable companies,” says Katarina Hammar.

Leaving Zenica, Nordea has been assured that the company has taken measures to limit the emissions and that more initiatives are in the works. Nordea’s sustainability team will continue to follow the development and pursue an active dialogue with the company.