Investigating the business of recycling and its carbon footprint

By: Nikunj Raithatha, MEng ’12, Two-Year MBA ’20
Scrap metal pile with machines and the NYC skyline

A view of Manhattan from Sims Metal Management in Jersey City, New Jersey

Recycling is widely considered to be a critical step in achieving environmental sustainability. However, when looking at the recycling of certain metals, there are emissions associated with the acquisition, separation, and processing of metal recyclables. Given that there is an environmental cost to metal recycling, questions regarding the sustainability of this practice have been called into question. Does the metal recycling industry really have a net-positive effect on the society? What initiatives could metal recyclers take to further improve their carbon footprint?

Thanks in part to funding from Johnson’s Social Impact Internship Fund, I had an amazing opportunity to investigate these questions for myself at Sims Metal Management, the world’s largest metal recycling company, as an Environmental Defense Fund (EDF) Fellow in summer 2019. My project goals were to:

  1. devise a custom framework and boundaries to monitor the company’s carbon footprint
  2. calculate the company’s carbon footprint for 2019, and
  3. identify, and quantify the company’s “net-positive” effect on the society, if any.

A hypothesis-driven approach

Nikunj at his computer in his office
Nikunj working on the carbon footprint analysis

Given the size and reputation of Sims in the metal recycling industry, it might not be surprising that it operates in more than 250 facilities and in 18 countries worldwide. Because of the organization’s magnitude, developing a research framework in a period of 10 weeks required a very systematic approach. In my first two weeks, I worked to gain an in-depth understanding of the client’s operations and data collection procedures by conducting dozens of interviews with their top leadership. Specifically, I dealt with the company’s logistics, accounts payable, human resources team, and operations heads. Next, I familiarized myself with the international standards that govern sustainability reporting such as Greenhouse Gas Protocol (GHG) by contacting different experts. After concluding this exhaustive process, I decided to base my hypothesis around how serious emissions occur and how to possibly mitigate them. Ultimately, I figured out that the majority of scrap steel customers are based in Asia, so I hypothesized that major emissions must be occurring due to the trans-continental transportation of the materials.

To test my hypothesis, I needed to analyze the data I collected. My analysis focused on recycled steel production and included the emissions associated with different steps of the recycling process. I focused on three main stages of the process:

  • the transportation of recyclables to processing facilities
  • the process of transforming those recyclables into products (like scrap metal)
  • shipping scrap metal to customers and melting it into reusable metals

The emission sources were split into three categories, dictated by the GHG Protocol: Scope 1, 2, and 3. Scope 1 represents emissions from the consumption of fuel for on-site activities, while Scope 2 represents emissions from electricity consumption. Finally, Scope 3 represents emissions from all non-core activities such as transportation, employee commutes, business travel, and product consumption.

Nikunj sitting in a large green truck
Gathering equipment specifications at one of the world’s largest metal recycling facilities
Nikunj standing by a large shredder
Capturing specifications of a shredder, equipment that shreds cars and other scraps into smaller pieces

Results with far-reaching impacts

My analysis revealed that the melting of scrap metal accounted for more than 90 percent of the emissions in the metal recycling industry’s value chain. Within the company’s Scope 1, 2, and 3 inventory, transportation of materials represented the largest share of emissions.

Graphic that shows Nikunj's analysis, previously explained
Metal recycling industry value chain and boundary of analysis

To get a sense of what these numbers really mean, I compared these emissions with the emissions from primary steel production, which is a process of extracting steel from virgin ore. The reason this comparison is so apt is because these two production methods have very different carbon footprints. According to the Bureau of International Recycling, primary steel is predominantly produced using the basic oxygen furnace (BOF) process, which is more than twice as carbon intensive as the electric arc furnace (EAF) process, the process of choice for secondary steel production (extracting steel from scraps). These comparisons show that if the volume of steel obtained from the scrap produced by Sims were to be extracted from virgin ore, it would have resulted in the emission of several million metric tons more of CO2 into the atmosphere. Furthermore, this comparison does not even include the emissions from activities upstream, like the mining and transportation of limestone, ore, and coal, which is part of the BOF process.

Graphic showing emissions broken out by scope
A side-by-side comparison of emissions between primary and secondary steel production

Sustainability: A continuous journey

By being a key player in the metal recycling industry, Sims prevented several million metric tons of CO2 emissions. To put this in perspective, this is equivalent to the greenhouse gases generated by more than one million passenger cars in one year. While this is a great position for Sims to be in, I recommended to Sims to accelerate its journey toward becoming a global leader in sustainability by taking steps to shrink its carbon footprint. Specifically, I recommended that Sims employ an external agency and set emission reduction goals in line with the Science Based Targets initiative, a partnership between various NGOs, to incentivize companies to set science-based targets and increase their competitive edge in the shift toward a low-carbon economy. Lastly, I advised them to perform normalized comparisons between their facilities and identify and adopt best practices from within the organization. I’m hoping that my time at Sims Metal Management, even though it was only 10 weeks, will have far reaching impact for the company and for the world, and that hopefully, we are one step closer to achieving a more sustainable and circular economy.

Nikunj Raithatha

Nikunj Raithatha, MEng ’12, Two-Year MBA ’20

Nikunj Raithatha is an MBA student at Johnson. He launched the Outdoor Ventures Club at Johnson and is a board member of the Cornell Energy Club. He has a master’s degree in mechanical engineering from Cornell’s College of Engineering and a bachelor’s degree in nuclear engineering from the University of Illinois, Urbana-Champaign. Prior to attending Johnson, he worked for six years in nuclear, oil and gas, and mining industries across four different countries.

1 Comment

  1. It’s awesome that recycling can help yo cut down on CO2 emissions. My boss has been telling me about how he wants to make sure that our company is doing its part to help the environment in the coming year. I’ll share this information with him so that he can look into his options for recycling the scrap metal that he produces.


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