Tata Steel CEO talks of going green

• Tata Steel leads the way to decarbonizing steel production. 
• Switching from coal furnaces key to energy transition. 
• Steel remains the metal of modern development.

The CEO and Managing Director of Tata Steel T. V. Narendran talks about going green in an interview with McKinsey’s Rajat Gupta.

Qn: Besides its decarbonization effort, what else has Tata Steel done to address sustainability?

Ans: People sometimes don’t realize that we are one of the largest mining companies in India. We mine over 45 million tons a year of mostly iron ore and some coal. We will be up to 65 or 70 million tons of mining in the next few years.

We have always done a lot of work converting mines back into forests after they are done. Today, with biodiversity being so important, there is a structured way to go about it. We bring in a third party to do a full assessment. They look at the impact of our activities and what we need to do after the mine is fully extracted. This has helped us develop biodiversity road maps. Of our 47 sites, 20 have developed a road map, and the rest will in due course.

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Tata Steel: Trillion dollar company in impoverished India

Qn: Tata Steel operates in some of the poorest spots in India. What diversity and inclusion actions have you taken as a result?

Ans: One thing we do is to make sure that our employee profile reflects the diversity in the community. For instance, we have had fewer women than we should, so we have done a lot of work on that. Our Indian workforce used to be 7 to 8 percent diverse. Now we are above 20 percent, and we want to get to 25 percent.

Some of this requires advocacy because there were rules in India governing how many shifts women could work on the shop floor. But we have recently gotten a change of law that we were seeking, and now we have women-only shifts in our mines in Jharkhand. Also, we have more than 100 transgender people working in our mines and other locations in Tata Steel.

Ans: You’ve talked about the challenges in India. How do you see its decarbonization efforts evolving?

Ans: India has set some ambitious goals and has signed up for the Paris Agreement. The country has made a lot of progress in the last few years, including coming further with renewables than could have been anticipated. The challenge for India is that this transition is going to cost money, and jobs will be at risk in many parts of the country.

India needs to fully appreciate the complexity of this transition. If we shift from coal to other sources of energy, we need to think about the social consequences for people who depend on coal for their livelihoods. We have to make sure that people who have just gained access to electricity are not impacted by higher prices for that energy. As renewables become a greater share of the energy mix, is our grid ready to deal with the resulting variability? We have a lot to think through.

We have to make sure that people who have just gained access to electricity are not impacted by higher prices for that energy.

Qn: China is a leader in green technologies. Where do you see India 20 years from now?

Ans: The progress China has made in the last seven to eight years is incredible. They have committed to it, spent a lot of resources on it, and incentivized the industry to make this transition. So while they have continued to build coal-based power plants and continue to grow in fossil fuels, they have grown very significantly in renewables. They are also working on nuclear power, and they have always been strong in hydropower. There is a lot for India to learn from China’s progress.

India has one advantage. China has to do a lot of work to fix the problems created by its growth over the last 20 years. India can avoid such problems by using cleaner solutions as we grow so we have less of a cleanup to do in ten or 20 years.

I am going to shift gears now to talk about your personal leadership journey. You have led Tata Steel through COVID-19 and recent geopolitical tensions. How do you approach these big challenges?

Challenges are par for the course. Soon after I took over, our iron ore mines were closed for almost a year, which had never happened in the history of Tata Steel. Suddenly, we were sourcing iron ore from across the world to feed our blast furnaces in India. This was a huge challenge—even moving iron ore from the port to the steel plant was a challenge because India was never an importer of iron ore.

In situations where there is a lot of uncertainty and insecurity, decisions need to be taken quickly, and it is very important to be close to the ground. During COVID, we had hour-long leadership calls every morning. Things were changing on the fly, so we could not abide by the regular cadence of meetings. The shift also increased the morale of the team, brought cohesion, aided communication, and helped us move much faster.

Qn: How have you changed as a leader over the past decade of being at the helm of Tata Steel?

Ans: One thing I have learned is that one must lead differently at different times. When I became CEO, I was the youngest CEO of Tata Steel, and everyone reporting to me was older. Now I am probably the oldest person at Tata Steel.

Leading a team of more experienced people is different from leading a team of younger people. The dynamic is not the same. Some younger leaders expect you to be more direct than you were with the older lot, but others want more space. One needs to be aware of the context in which one is leading—and adapt. There’s no one-size-fits-all leadership style.

Qn: As you look out at the next five years of your tenure, how do you imagine you will evolve as CEO?

Ans: For me personally, it’s about leaving Tata Steel much stronger than when I got this job. It’s like running a relay race. Somebody gave me the baton, and I need to make sure I hand it over well.

Second, this is an old and multigenerational organization. Our greatest strength is the people and their emotional connection to the company. How do I make sure we preserve the right parts of the culture?

It’s not about sticking by everything that worked in the past. Some things that worked in the past won’t work in the future. How do we bring in new elements of culture so that younger people feel interested enough to invest their future in the company? If I can deliver a Tata Steel that’s more sustainable, and stronger financially, structurally, and culturally, that will have been a good contribution.

Source: McKinsey.com