An Overview of Environmental and Social Due Diligence in the Iron and Steel Industry
The environmental and social due diligence in the Iron and Steel industry is a third-party assessment that differs from routine compliance with its forward-looking approach, benchmarking against international standards, and its reliable structure.
ESDD in the iron and steel industry is a system designed as per Indian laws related to mining, labour, environment, and corporate-disclosure law, international ESG standards, and lenders’, investors’, or boards’ internal ESG policy.
The key deliverables include an ESDD report, a risk register, a costed ESAP, a stakeholder management plan, and a limited scope of environmental and social review. The ESDD in the iron and steel industry report covers specific findings, corrective actions for high-prone risks, and ESAPs.
If you’re seeking a consultant for environmental and social due diligence in the iron and steel industry, reach out to the Enterclimate experts today!
Non-compliance Can Lead to Collapse!
One missed ESDD gap can delay funding, acquisitions, and expansion.
Book a 1:1 Virtual MeetingWhat is the Need for ESDD in the Iron and Steel Industry?
ESDD in the iron and steel industry is highly needed due to the four correlating driving factors that include capacity expansion, capital market disclosure, decarbonization pressure, and strict community protection standards.
The Ministry of Steel, as per the National Steel Policy, sets a 300 million tonnes capacity target by 2030, as of April 2026. Here is a given table for the crude steel production and installed capacity in the Indian iron and steel industry between FY26 and FY30.
| FINANCIAL YEAR | CRUDE STEEL PRODUCTION | INSTALLED CAPACITY |
|---|---|---|
| 2026 | 162 million tonnes | 200 million tonnes |
| 2028 | 210 million tonnes | 250 million tonnes |
| 2030 | 300 million tonnes | 330 million tonnes |
The average CO2 intensity of India’s crude steel is 2.55 tonnes of CO2 per tonne of steel. It is roughly 38% above the global benchmark and National Green Steel Mission target of 2.0 tonnes by 2030 and 1.5 tonnes by 2040. ESDD is a solution that converts these targets into an operational roadmap.
Decarbonization in the Indian Iron and Steel Industry
From 2025 onwards, the iron and steel industry starts to decline gradually in emission intensity. It reduces from 2.5 tonnes of CO2 per tonne of crude steel to approximately 2.4 tonnes CO2 per tonne of crude steel by 2026. While this remains insufficient to fulfil the decarbonization targets, it keeps the iron and steel industry at high compliance risk.
Moving ahead, the transition requires a reduction in the carbon emissions to nearly 2.0 tonnes CO2 per tonne of crude steel by 2030, which might further decline to 1.5 tonnes CO2 by 2040, and is projected to reach 0.7 tonnes CO2 by 2050.
Here is a list of the Installed Crude Steel Capacity as per the states for FY25-26:
- Odisha
- Jharkhand
- Chhattisgarh
- Karnataka
- West Bengal
- Maharashtra
- Gujarat
- Tamil Nadu
- Andhra Pradesh
Who Requires ESDD in the Iron and Steel Industry?
ESDD in the iron and steel industry is mandatory for different stakeholders. See the pointers given below to know if you’re included too.
- Listed Steel Companies: They require annual BRSR or BRSR core under SEBI LODR Registration 34(2)(f); top 1,000 listed entities.
- Bankers or Project Lenders: They need environmental and social due diligence in the iron and steel industry. It is required for the Equator Principle-based project finance, ECB or RBI-regulated loans, and consortium term loans.
- Listed Bond Issuers: The environmental and social due diligence helps listed entities secure green bonds or sustainability bonds.
- Sovereign or Multilateral Lenders: Such stakeholders require ESDD to obtain funding from multilateral development institutions, such as the IDB, World Bank, IFC, and AIIB.
- Greenfield Project Sponsor: They require ESDD in the iron and steel industry during pre-investment decisions. It includes EIA and EC packages, too.
- Brownfield Expansion Promoter: They require environmental and social due diligence in the iron and steel industry for capacity expansion in the iron and steel industry above EIA notification 2006 thresholds (category A and B).
- Private Equity or Strategic Acquirers: They need ESDD for an M&A or growth-equity transaction that targets an Indian steel asset.
- Insurance Underwriters: They need environmental and social due diligence in the iron and steel industry for property and casualty, with the environmental liability to cover steel sites.
What are the Documents Required in Environmental and Social Due Diligence in the Iron and Steel Industry?
Find the list of essential documents for the environmental and social due diligence in the Iron and Steel industry useful for plant setup, configuration, and other requirements.
STATUTORY DOCUMENTS
- Environmental Clearance (EC)
- Consent to Establish (CTE)
- Consent to Operate (CTO)
- Hazardous Waste License
- Forest and Wildlife Clearance
- Mining Lease and Mine Closure
- Water Allocation
- Land Records
- LARR R&R Documents
- Other Statutory
OPERATIONAL, TECHNICAL & ESG DOCUMENTS
Process Flow and Mass Balance
- Plant Block Diagram
- Mass and Energy Balance
- Heat – Balance
- Emission factors
Air & GHG
- CEMS Data
- Stack Monitoring Reports
- GHG inventory (Scope 1,2,3) per GHG Protocol
Water and Effluent
- Water-audit
- ETP design basis
- ETP daily or monthly logs
- ZLD report (if applicable)
Solid and Hazardous Waste
- Waste Inventory
- Disposal manifests
- Slag-utilization MoUs
- CHWTSDF receipts
Energy
- Energy-audit (BEE-format)
- Specific energy consumption (SEC)
- Captive power plant fuel mix
EHS Management
- ISO 14001
- ISO 45001 certificates
- HIRA register
- Near miss/LTI/ fatality records
Labour and Social
- HR Policy
- Contractor Governance
- Workmen’s Compensation
- ESI/PF
- PoSH IC Reports
- Contract wage registers
Community and CSR
- CSR Policy
- CSR-2 filings
- Livelihood impact audits
- Stakeholder-grievance log
Sustainability Reporting
- BRSR for the last 3 years (if listed)
- TCFD/ GRI/Responsible steel report
- SBTi commitment
Insurance
- Public liability cover under PLIA 1991
- Environmental liability cover
CORPORATE, GOVERNANCE AND TRANSACTION DOCUMENTS
- Memorandum of Association, Articles of Association
- Latest Annual Report
- ROC filings
- Board ESG/ Sustainability Committee charter and minutes
- Code of conduct, anti-bribery policy, whistle-blower policy
- Risk register and ERM policy
- Litigation list includes pending NGT/NHRC/High Court/ SC matters
- For transactions, Information memorandum, term sheet, draft SPA, lender term sheet, RBI/FEMA approvals (if cross-border).
What is the Procedure of Environmental and Social Due Diligence in the Iron and Steel Industry?
Enterclimate’s seven phases of Environmental and Social Due Diligence in the iron and steel industry have helped 50+ businesses reduce timeline and risk together. Look below for the given phases, with the expected timeline and what each cover.
Phase 1: Scope, Documenting, and an Expert Team (Week 1 to 2)
- Identify the purpose, whether it’s brownfield, greenfield, lender-driven, transactional, or BRSR.
- Define the scope for corporate boundary, location, value chain depth, and applicable standards (EP4, IFC PS, and Responsible Steel).
- Issue a document request list (DRL) and setup a secure data room.
- Prepare a team, including a mining specialist, GHG analyst, labour law counsel, an environmental engineer, and a social development and OHS expert.
Phase 2: Regulatory Compliance to Unit’s Review (Week 2 to 4)
- Reviewing statutory clearance, EHC policies, EMP compliance, monitoring data, and BRSR reports for the last 3 years.
- Plan the unit’s setup as per governing norms. Also, identify the possible gaps to pre-prepare before reviewing.
- Carbon baseline is evaluated as per the GHG Protocol Corporate Standard.
- Preliminary risk ratings range from low, moderate, substantial, or high.
Phase 3: Site Visit and Stakeholder Engagement (Week 4 to 7)
- Site visit covers inspection of all processing units, captive power plants, raw material yards, ETP, mining pits, and EHS managers.
- Keep the photos and videos of the unit layout as evidence.
- Interviewing contractors, senior management, EHS managers, and worker representatives.
- Engage with the community by organizing interviews and focus-group discussions.
Phase 4: Data Analytics and Gap Assessment (Week 6 to 9)
- Benchmarking against the IFC EHC guideline for integrated steel mills
- GIS mapping of land use and sensitive receptions
- Air quality and noise modelling cross-check against ambient monitoring
- Quantification of regulatory fine exposure under the EP Act/NGT principles
Phase 5: Risk Ratings, ESAP and Draft Report (Week 8 to 11)
- Consolidated risk register with categorization, recommended actions, and root cause.
- Prepare a draft of the ESDD report and send it to the client for review.
- Create a plan for environmental and social corrective actions (ESAP) with timelines.
Phase 6: Client Workshop and Final Report (Week 10 to 12)
- Workshop with senior leadership; alignment on disputed finding and refinement of ESAP.
- Final ESDD report issued under Enterclimate’s professional ESG and compliance experts.
Key ESG Risk Areas Assessed under ESDD in the Steel Industry
Look for the key ESG risks, including air, water, waste, land, labour and community assessed under ESDD in the steel industry-
Air Emissions and GHG
Steel-based factories produce high pollutants and greenhouse gases affecting nearby communities and wildlife. ESDD evaluates the level of pollutants and identify the gaps. It ensures regulatory compliance with CEMS, its strict monitoring system.
Water and Effluents
The production of Steel requires significant amount of water, making regulatory compliance mandatory. The environmental and social due diligence in the iron and steel industry reviews the approvals for water source, discharge norms, zero liquid discharge, and wastewater efficiency.
Land, Forest and Biodiversity
Improper use of land is a key challenge in environmental and forest regulations. ESDD review approvals, fulfill mining obligations, and save biodiversity for regulatory compliance.
Labour, Health & Safety
The Steel-based factories mostly operate at high risk. ESDD evaluates performance of the contractor management, workplace policies, and checks compliance measures. All of this reduces unexpected accidents to meet the national and global safety benchmarks.
Governance and ESG Reporting
Steel companies must align with multiple ESG reporting frameworks. ESDD consolidates compliance across GRI, TCFD, BRSR, and CSR, resulting in needs less duplication, better transparency, and a proper reporting structure.
Community, Indigenous Peoples and R&R
Steel projects mostly impact the tribal and local communities. ESDD evaluates consent processes, livelihood restoration, rehabilitation measures for socially responsible operations, and regulatory compliance.
Governing Laws ESDD 2026: Environmental and Social Due Diligence in the Iron and Steel Industry
Look for governing laws of environmental and social due diligence in the iron and steel industry in 2026, as follows:
- Environment Protection Act, 1986
- EIA notification 2006 (as amended)
- Air (Prevention and Control) Act, 1981
- Water Act (Prevention and Control) 1974
- Hazardous Waste Management Rules, 2016
- Forest (Conservation) Act, 1980
- BRSR: SEBI LODR for the top 1000 listed companies.
- Mines and Minerals (Development and Regulation) Act, 1957
- Labour Codes 2020+ factories or OSH acts
- IFC Performance Standards from 1 to 8 (Equator Principles).
- Responsible Steel (Steel-Sector Standard)
- World Steel Sustainability Charter/SBTi/TCFD
- Solid Waste Management Rules, 2016
- MMDR+MCDR/MCR, 1957/2017
- Forest (Conservation) Act + Rules 2023
- Forest Rights Act, 2006
- Land Acquisition (LARR) Act, 2013
- National Green Tribunal Act, 2010
- Labour Codes (consolidating 29 acts) 2020
- Factories Act / OSH Code, 1948/2020
- PoSH Act 2013
- Child Labour (P&R) Act, 1986 (amendment 2016)
- DPDP Act, 2023
- SEBI LODR + BRSR/BRSR Core, 2015 (BRSR 2021/22)
- Companies Act-CSR (Section 135), 2013
- Steel Scrap Recycling Policy, 2019
- National Steel Policy, 2017
- Green Steel Mission (notified 2024-25)
Key regulators are as follows:
- MoEFCC
- CPCB
- SPCBs
- CPCB
- Ministry of Steel
- IBM
- MoLE
- NHRC
- NGT
- Local PRIs
Globally set benchmarks for the Indian Steel Industry aims to:
- IFC Performance Standards 1-8 (2012, with 2024-25 Q&A updates).
- Equator Principles 4 (Latest Revision, 2024)
- Responsible Steel Standard V2.1 (2024)
- World Steel Association Sustainability Charter and Climate Action Program.
- Science-based targets initiative (SBTi) includes Steel Sector Guidance, May 2023, and revised in April 2025
- The Task Force on Climate-related Financial Disclosures (TFCD) covers operationalized under ISSB IFRS S2 from FY 2024-25.
- UN Guiding Principles on Business and Human Rights (UNGPs)
- OECD Due Diligence Guidance for Responsible Business Conduct.
What are the Best Practices & Standards of ESDD in the Iron and Steel industry?
Implementing ESDD in the iron and steel industry involves best practices and standards that you must know, along with why they matter. Look below the standards or framework and why they matter.
- IFC Performance Standards 1 to 8 are established by the International Finance Corporation. They’re an essential globally accepted benchmark for Environmental and Social Due Diligence (ESDD) in the iron and steel industry, especially for projects seeking IFC funding and aligning with international risk and sustainability expectations.
- Equator Principles 4, governed by the EP Association, is adopted by 140+ financial institutions globally. It is essential as it triggers project funding decisions through mandatory Environmental and Social Due Diligence (ESDD).
- ResponsibleSteel Standard v2.1 is operated by ResponsibleSteel ASBL and is required for site-level certification covering ESG performance. It also acts as a market-access enabler for European and global buyers.
- World Steel Association Sustainability Charter is designed, owned, and managed by the World Steel Association. It defines industry-led commitments on emissions reduction, energy efficiency, and water stewardship.
- SBTi Steel Sector Guidance is adopted by the Science Based Targets initiative. It provides a validated pathway for companies to set 1.5°C-aligned steel sector decarbonization targets.
- IFRS S1 and IFRS S2 are issued by the International Sustainability Standards Board (ISSB) and are widely regarded as the global successor framework to TCFD. They are increasingly integrated into regulatory reporting expectations, including SEBI-aligned disclosures for listed entities.
- GRI Sector Standard 14 (Metals) is developed by the Global Reporting Initiative. It provides sector-specific disclosure metrics tailored for metals and mining sustainability reporting.
- UN Guiding Principles on Business and Human Rights (UNGPs) and OECD Due Diligence Guidance function under UN and OECD frameworks, respectively, and serve as foundational global baselines for corporate human rights and responsible business conduct.
Impactful Environmental and Social Due Diligence in the Iron and Steel Industry for Steelmakers, Lenders & Investors
See how strategic use of environmental and social due diligence in the iron and steel industry can reduce risks associated with the project, accelerate approvals of steel investments, and unlock cost savings.
- ESDD consistently delivers CapEX savings, from 1.5 to 4% by avoiding penalties, optimizing design, reducing insurance costs, and improving lender approvals.
- Integrate IFC Performance standards and Equator Principles. Not only does it improve financing readiness, but it also enables smooth refinancing, strengthens ESG credibility, and provides access to green funding.
- Apply your strategy in the greenhouse gases (GHG) inventory scope (Scope 1,2, and 3) aligned with India’s less than or equal to 2.0tCo2/t target by 2030. It ensures long-term market access and eligibility for green incentives.
- Design an assurance-ready documentation to avoid last-minute compliance bottlenecks. Also, ensure smooth ESG reporting for listed entities.
- Strong grievance mechanisms and Free Prior and Informed Consent (FPIC) lower litigation risks, a cause of project delays in steel regions.
- Engage with Enterclimate’s ESDD Experts at the early stage to reduce the project timelines by 30%. It ensures faster execution through structured scoping, organized data rooms, and streamlined stakeholder coordination.
ESDD Timeline and Fee Structure: Environmental and Social Due Diligence in the Iron and Steel Industry
Here is an informative and well-structured table providing information on the total timeline and fee structure required for the environmental and social due diligence in the iron and steel industry.
| TYPE | ESDD TIMELINE | EXPECTED FEES (Rs.) |
|---|---|---|
| Limited/Red flag ESDD (Transactional) | 3 to 5 weeks | Rs. 8 lakhs to Rs.18 lakh |
| Standard ESDD with a single integrated site | 8 to 10 weeks | Rs.18 lakh to Rs.35 lakh |
| Comprehensive Greenfield /Brownfield ESDD | 10 to 14 weeks | Rs. 30 lakhs to Rs. 60 lakhs |
| Annual BRSR/BRSR Core Assurance Engagement | 6 to 10 weeks (annual) | Rs.12 lakhs to Rs.28 lakhs |
| Equator Principles 4 IESC + Monitoring | 12 to 16 weeks + retainers | Rs. 35 lakhs to Rs. 75 lakhs |
What are the Penalties in Non-Compliance of ESDD in the Iron and Steel Industry?
If you have received a notice for closure or facing heavy penalties, without even knowing or realizing if you have been non-compliant. Look for the table given below providing a list of possible violations and penalties in non-compliance with ESDD in the iron and steel industry:
| VIOLATION | INDICATIVE PENALTY (2026) | STATUTORY PROVISION |
|---|---|---|
| General environmental contravention | A civil penalty of Rs.10,000 to Rs.15 crore with added 1% of the company’s turnover. | Section 15 EP Act 1986 (post-2024 amendment) |
| Air-emission breach and false reporting | A civil penalty is imposed, ranging from Rs.10,000 to Rs.15 crore. | Section 39A Air Act 1981 (post-2024 amendment) |
| Waste effluents or water contravention | A civil penalty ranging from Rs.10,000 to Rs.15 crore, including restoration cost. | Section 41B Water Act 1974 (post-2024 amendment) |
| Environmental harm and polluter pays principle | Damages by NGT impose a penalty ranging from Rs.25 crore to Rs.500 crore, depending on the harm. | NGT Act 2010 (Restitution and exemplary damages) |
| Violation post EC approval and false data submission | Environmental Clearance (EC) may be withdrawn leading to company closure or criminal proceedings. | EIA Notification, 2006 (Withdrawal of EC) |
| Non-authorized handling or disposal of waste | Rejection of approvals with penalty ranging between Rs.1 crore to Rs.10 crore, including storage costs. | Hazardous Wastes Rules, 2016 |
| Breach of mining lease terms and illegal mining | Up to 5 years imprisonment with Rs.5 lakh penalty and recovery of mineral value. | MMDR Act 1957 / MCDR 2017 |
| Conversion of forest land without clearance | Up to 1 year imprisonment with restoration costs and project shutdown. | Forest (Conservation) Act 1980 |
| Failure to pay R&R or compensation | Statutory interest of 12% with criminal liability of officers in default. | LARR Act 2013 |
| Child labour, wage default and OSH non-compliance | Up to Rs.5 lakh penalty with imprisonment up to 2 years; doubled for repeated offences. | Labour Codes 2020 |
| Personal data breach of HR/community data | Up to Rs.250 crore per breach. | DPDP Act 2023 |
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Book a 1:1 Virtual MeetingWhy Trust Enterclimate for Environmental and Social Due Diligence in the Iron and Steel Industry?
Enterclimate has proved its mettle as India’s most trusted green business consulting and compliance management company. With its delivery reach beyond 10,000+ Pin codes in India and 10+ years of proven experience, it is the first choice of the top 3% of entrepreneurs in the market. From environmental due diligence to environmental clearance, environmental auditing, and environmental impact assessment, we handle everything end-to-end.
Given below are the reasons why Enterclimate is the first choice for environmental and social due diligence in the iron and steel industry-
- 582+ Companies in the Iron and Steel Industry trust us for ESDD Solutions
- Rs 100 Crore+ Compliance Risk Exposure Reviewed
- 100% Remote ESDD Documentation Assistance Available
- Saved 20,00,000+ Hours of Entrepreneurs
- 15+ Statutory Compliance Areas Mapped
- 24/7 Dedicated ESDD Consultants PAN India
- No.1 Green Consulting and Compliance Management Partner
- 10+ Years of Market Leadership
- 360° Environmental, Social and Governance Review
FAQs on ESDD in the Iron and Steel Industry
The Environmental and Social due diligence in the Iron and steel industry evaluates a steel company’s compliance with Indian laws and global ESG standards. ESDD in the iron and steel industry goes beyond routine audits with a forward-looking approach.
Lenders, listed companies, project sponsors, and private equity firms need ESDD in the iron and steel industry. Bond issuers and multilateral funding institutions also require ESDD.
Yes, the Environmental and Social Due Diligence in the Iron and Steel industry is mandated by the EP Act, the EIA Notification, and the SEBI LODR. It aligns with 25+ Indian and international regulatory frameworks.
ESDD in the iron and steel industry takes 3 to 16 weeks, depending on scope and site complexity, and for a single integrated site, it usually takes 8 to 10 weeks.
The Environmental and Social Due Diligence in the Iron and Steel industry ranges from Rs.8 lakhs to Rs. 75 lakhs, based on the project type. Its fees depend on the site size, scope, and applicable standards.
ESDD in the Iron and Steel industry covers air emissions, waste disposal, water use, worker safety, and land rights. Also, it evaluates community impact and governance reporting gaps.
The Environmental and Social Due Diligence in the iron and steel industry requires statutory clearances, labour records, GHG inventory, and ESG reports. It requires BRSR filings, water audits, and CSR compliance documents, too.
Non-compliance or skipping ESDD in the iron and steel industry accounts for up to Rs. 500 crore penalty under NGT principles. The Environmental and Social due diligence prevents EC withdrawal, criminal proceedings, and closure of the unit.
The Environmental and Social Due Diligence in the Iron and Steel industry aims to convert India’s emission targets to be fulfilled by 2030 into an operational roadmap. It tracks scope 1,2, and 3 emissions against SBTi-aligned benchmarks.
A routine audit checks past compliance, while environmental and social due diligence in the iron and steel industry takes a forward-looking approach. Also, it benchmarks against international standards like the IFC Performance Standards and the Equator Principles, which routine audits do not cover.
ESG reporting discloses a company’s sustainability performance to stakeholders through structured frameworks like BRSR and GRI. ESDD in the iron and steel industry is an in-depth assessment that identifies specific risks, gaps, and corrective actions. The environmental and social due diligence in the iron and steel industry produces an actionable risk register and costs ESAP, not just a disclosure report.
