Good morning, ladies and gentlemen. For those of you just joining us, welcome to the 2023 NYSE Investor Conference. I consider us all fortunate to have with me here today, Nucor Executive Vice President of Business Services and General Counsel, Greg Murphy, who, among his many roles, has responsibility for environmental and public affairs. Greg has also focused very heavily on Nucor's expanding sustainability and ESG efforts, which included the establishment of a dedicated corporate sustainability team and a greenhouse gas reduction technology team. He also led the efforts to develop and implement Nucor's greenhouse emissions reduction target, which were announced in the summer of 2021. There is truly no one more qualified to discuss Nucor's circular business model and many efforts on the ESG front. Greg, welcome to London. I believe you have a brief message before we get started with our fireside chat.
The floor is all yours.
Thank you so much, and it's so great to be here. Good morning, everyone. I do want to show a short video before we start our Q&A, which is sort of an overall summary of Nucor's sustainability journey. It's a very short video, and then we'll kick it off.
From wind turbines and automobiles to high-rise buildings and data centers, the green economy is being built on steel. Nucor is North America's largest recycler and most sustainable steel producer. For more than 50 years, we have pioneered the use of circular electric arc furnace steelmaking, based on recycling scrap into high-quality new steel. Steel is one of the most recyclable materials on Earth. It can be infinitely recycled with no loss of quality. Every year, our family of domestic EAF steel mills recycle more than 20 million tons of scrap into new steel using our circular process. Our circular steelmaking process uses electric arc furnace or EAF technology to produce steel with greenhouse gas intensity, one-third the global extracted steelmaking average for Scope 1, 2, and 3.
Our sustainable process is why Nucor accounts for roughly 25% of America's steel production, but only 8% of the industry's direct greenhouse gases. In 2021, Nucor launched Econiq, the world's first net-zero carbon steel at scale, with launch customer GM. Econiq was introduced to offer steel consumers emissions-free steel products to help meet their sustainability goals. The Econiq certification covers Nucor's entire family of products. Today, Nucor is pioneering the circular economy of steel, where industrial scrap and end-of-life steel products are collected and recycled into new steel and given a new life. Nucor leads the steel industry in decarbonization, we aren't done. Our goal is to meet the Paris one point five degree target by 2050. In 2021, we committed to a 35% combined reduction in our steel mills Scopes 1 and 2 greenhouse gas intensity by 2030.
We are well on our way to achieving this goal by expanding the renewable energy sources that power our mills through investments in low carbon power generation projects, and by investing in technologies to help us reduce CO2 at every point in our value chain. The green economy is being built on steel. The steel it is built with matters.
Introducing that video. In 2021, Nucor committed to reduce its GHG intensity at the steel mill operations by 35% in 2030 vs the 2015 baseline. That was the year the Paris Climate Agreement was adopted. What is Nucor's strategy for attaining that goal, and what is your progress to date?
Yeah, thank you for the question. You know, when we set our goal, we really focused on Scope 1 and Scope 2, because that's what the world was really paying the most attention to. One of the issues that I think all companies like Nucor are grappling with is: How do we define Scope 3? What is and isn't properly within the definition of Scope 3? When we set that goal, we focused on a 35% reduction in Scope 1 and Scope 2, but we also decided to publish our most significant Scope three emissions. For Nucor, it's really the carbon-bearing raw materials that make up our steelmaking process, and then inbound and outbound transportation. That represents a large percentage. I'm very pleased to report that we're progressing nicely against that target.
If you do the math, that Scope 1 and Scope 2 reduction would have us ending in 2030 at 0.38, and today we sit right at 0.44, which is a significant reduction from our starting point, the year that the Paris Agreement was adopted. I'm also pleased to report that in this past year, we had a record-setting year for our Scope 1, Scope 2, and Scope 3 emissions, which sits at 0.76 tons of CO2 for every ton of steel produced, which is about a third of what the average is for steelmaking and is significantly ahead of the global averages.
In terms of what we're doing to accomplish those goals, I like to tell people that, greenhouse gas reductions, there really is no one size fits all. Much of this challenge that we all face as an industry is really based on where you are geographically, even the geology on which you sit. Your availability and access to raw materials, your supply chain, and other things like that. Nucor has very much taken a multifaceted approach. We've attacked our Scope 1 emissions by looking at some of the charge and injection carbon, which we use as part of the formation of our foamy slag, which is a necessary part of making steel in an EAF.
We're looking at using biochar substitutes, using either renewable forestry products or other waste wood products as a substitute for that charge and injection carbon. We're also looking at things like how can we reduce natural gas? While we don't use a huge amount of natural gas as an EAF steelmaker, we do use it as part of our reheat furnace or tunnel furnace process and in other applications. So we're constantly looking at ways to install better equipment, be more efficient. Then, of course, we're also looking at our Scope 2 emissions and what can we do to accelerate the greening of the grid. Nucor was a leader in being an adopter of virtual power purchase agreements. We consume an amazing amount of power as we make our steel using electric arc furnace.
The good news is, it's much less greenhouse gas intensive. The bad news is we do need to use a lot of energy. If we can accelerate that trend to bring on more renewables or forms of clean energy, then that will not only benefit Nucor, but it will benefit the rest of the world. By doing these virtual power purchase agreements, Nucor lends its investment-grade credit rating to projects which ensures that they then get built. We bring on large wind and solar projects, and then we are able to use the renewable energy credits that are generated from those projects to offset any residual Scope 2 emissions. Those are just some of the things that we're doing.
Nucor has not yet set a net-zero reduction target. What's the current thinking on that internally at Nucor, and could that potentially become official policy?
When we set our original greenhouse gas reduction targets, we really focused on what the rest of the world was focused on, which was primarily Scope 1 and 2, for the reasons I mentioned. As we continue along in our journey, one of the things that Nucor has recognized is that Scope 3 does represent a significant part of our overall carbon footprint, and that's why we were a leader in being transparent in disclosing those greenhouse gas numbers, because without drawing attention to them and without focusing on them, it's very, very difficult to drive reductions. That being said, as we evolve in this process, we realize we do have significant levers we can pull to reduce all 3 scopes of our emissions.
Nucor is actively engaged in a process as we speak, in setting a science-based target for our Scope 1, Scope 2, and Scope 3 emissions for net-zero by 2030. The other thing that I guess I want to point out is that in the United States, the Securities and Exchange Commission has a long-pending proposed greenhouse gas reduction disclosure rule that's been out there, and it's been involved in a very extensive comment period. There were some things in the SEC's original draft that I think actually made it more difficult for companies that have greenhouse gas ambitions, like Nucor, to set those targets based on Scopes 1, 2, and 3.
For example, there was a lot of attention drawn to whether or not companies would be required to disclose Scope 3 emissions. The SEC said they would, but only if they were material. There really wasn't a very good definition. In fact, there was really no definition at all about materiality. The other thing is, for companies that did set Scope 3 reduction targets, the disclosure rules were gonna be more onerous, and we're gonna require those companies to disclose more than companies that perhaps lacked that ambition and didn't set Scope 3 emissions reduction targets. We've sort of been processing all that, as the rest of the world, and we believe that we're in a very good position to do just that.
The last thing I guess I would like to mention, Lawson, is that if you look at the steel industry, net-zero is defined for the steel industry, not at absolute zero, but at 0.116 tons of CO2 for every ton of steel produced. That's because steel is considered one of those harder to abate industries. We see a pathway. It's not gonna be easy, but Nucor likes taking on challenges when things aren't easy, we're very excited that we're gonna be announcing some of that here in the very near future.
Fantastic! Now, you mentioned science-based targets. I'd be curious to know if Nucor's reduction targets align with SBTi. Could you actually please touch on the Global Steel Climate Council and those initiatives?
Yeah. Yeah. Great, great segue. We were actually actively involved in the Science Based Targets initiative's attempts to rewrite the rules of engagement for the industry. We participated in a working group because Science Based Targets initiative is in the process and has put out for public comment, proposed new guidelines. One of the things that came about during that process is that Science Based Targets initiative has latched on to something called the sliding scale. The sliding scale really creates a dual standard for the industry. It says that if you're an EAF producer and you use almost, you know, a much lower component of things like pig iron and heavily embodied carbon raw materials, then you have one standard.
If you're a blast furnace or integrated steel producer, and you have very little scrap in your mix, then you have a very different standard. We don't think that's the right way to look at things as an industry. We think that we should create ambition for the entire industry to transition. One of the things that we know is that one of the easiest ways that we can reduce the carbon intensity in the steel industry, and do so very dramatically by factors of three or four, is by converting integrated steel production to EAF-based production.
In fact, if you talk to the large producers in Europe, and you ask them about their decarbonization plans, most of them have plans to retire old integrated blast furnace, basic oxygen furnace, assets, and convert to direct reduced iron and EAF production, which is essentially what Nucor does today. When we got to a point where we really couldn't reach an agreement and consensus around this dual standard, this sliding scale, Nucor and a number of other steel producers launched an alternative science-based targets setting organization called the Global Steel Climate Council. I'm proud to report that we have nearly 40 members of steelmakers all across the globe, including many of the producers here in Europe, producers in the Americas, producers in Asia.
I think in total, they represent production that occurs in about 79 countries around the globe. It's a, it's a very, very large group, and we released our draft proposal. Instead of having two scales for how to decarbonize the steel industry, we basically had a unilateral path, and we said, "Here's what we need to do as an industry to reach net-zero under the IEA glide path by 2050." You know, it didn't matter how you made the steel, because at the end of the day, consumers of steel are interested in what is the embodied carbon content of that which I buy to put in my automobile, my washing machine, my building? And so we developed a singular glide path, and that's been out for public comment for some time now.
We've received a pretty overwhelming response, and we're hoping to finalize that rule in the next 30- 45 days.
I'd be interested to hear if investors are aligned with the steel industry and Nucor's pivot to GSCC.
Far, we've found people to be very receptive, certainly those that really care about sustainability and care about the embodied carbon in our steel. In fact, we found the support to be overwhelming. You know, really, this movement to create a dual scale or a sliding scale started a good number of years ago and really originated here in Europe. When you actually ask people to explain why they're endorsing a dual standard, and you begin to sort of explain to them that it really doesn't make sense that companies should be able to declare products green or sustainable when they have sometimes nine or 10 times the embodied carbon of another product, they quickly understand and get it. We're trying to create a more ambitious standard.
We're trying to create a climate-friendly standard, and we're really trying to create a standard that we think gives us, as an industry, the best chance of reducing our overall greenhouse gas footprint. We're very excited about it.
That's great. I wanted to ask about EAF technology. Nucor produces all of its carbon steel using electric arc furnace technology. The competing technology would be blast furnace, which has far, far higher GHG emission intensity. It's been suggested by several blast furnace producers that there are certain grades of steel that can only be produced in blast furnaces. What are your views on that?
We believe it's a false narrative, and the reason we believe that is because we've proven that wrong. You know, Nucor has a very proud history dating back to the 1960s, where we made a very serious gamble to go all in on electric arc furnace steelmaking production. You know, to be brutally honest, at the time that decision was made, while that was driven by cost considerations, access to available raw materials, and the nimbleness of our business model, greenhouse gases had nothing to do with that decision. However, it actually has positioned us extraordinarily well in the world in which we sit today, where there is a great deal of talk in the industry about sustainability.
You know, back then they said, "Well, Nucor can make certain low grades of steel like rebar, but they'll never be able to make flat products using an electric arc furnace." In 1988, we proved that wrong when we developed our first CSP sheet mill in Crawfordsville, Indiana. Then they said, "Well, they'll be able to make construction-grade flat products, but they'll never be able to make the advanced automotive grades." We proved that wrong because today we supply advanced high-strength steels to the automotive industry, both for customers based here in Europe and in North America. Every time our automotive customers come to us, and they tend to be the most discerning in terms of the grades of steel that they're looking for.
They challenge us to make another grade, we've been successfully able to do that. We believe that it's not only possible, but it's happening as we speak today. I think historically, a lot of that steel has been supplied by integrated producers. In America, all of the long products in America are now based, built and made using EAF technology. The only thing that's left for integrated producers today is flat roll products. As Nucor and other companies like Nucor continue to advance and develop these more sophisticated grades of steel, ultimately, automotive supplier, automotive companies and other companies are gonna have to make a choice.
Do I wanna buy the exact same grade of steel made in a more sustainable way, using a circular process that uses a lot of scrap as a raw material, or do I wanna buy a higher embodied carbon product? We're seeing that transition unfold before our very eyes.
Fantastic context. I'm curious to know if you think scrap scarcity would be a limitation on the world shifting to increased production from electric arc furnaces?
Again, I think that's the second big false narrative in my view. To me, the best evidence of that is I'd point to two things. One is, if you look at the experience that we've had in the United States dating back to the 1960s. In the 1960s, there really was no electric arc furnace steelmaking capability in the United States, Nucor, and then other fast followers, you know, went along with the model that Nucor really perfected in the U.S., which is making steel using an EAF. Today, more than, you know, 70% of the steel in North America and certainly in the United States, is produced in electric arc furnaces. That includes sheet products, plate products, bar products, engineered bar products.
The U.S. has proven that we can go that far. If you think about what's actually under announcement now and is publicly going on and is advancing that transition even further, Nucor has just completed building a state-of-the-art plate mill in Brandenburg, Kentucky. We've announced a new sheet mill in West Virginia. We're building another bar mill in Lexington, North Carolina. Some of our competitors have also announced their intention to add the capacity in the U.S. market, and 100% of that is EAF-based. We expect that number to get to closer to 80% here in the coming years. Will we ever get to 100%? Probably not.
I do think there's a place in the industry for integrated production, and I think that will be true for some period of time into the future, particularly as the integrateds explore alternative ways of iron-making. If we can come up with some alternative ways of iron-making that are lower in body carbon, fossil-free iron-making, then that, to me, will solve a lot of these issues. There's plenty of scrap. The second thing I would point to, which demonstrates the false narrative, is the only people who are saying that there's not enough scrap are the integrated steelmakers. If you ask companies like Nucor, which use the EAF production, which is largely scrap-based, we're not worried about it. Why are we not worried about it?
Well, because we've developed a very sophisticated market and supply chain in the United States for the free flow of scrap. We believe the same market dynamics will take hold in the developing world. It's not like they don't have steel, it's just that they've never had a demand pull for scrap in a lot of those markets. Of course, we favor the free trade of scrap globally because we think it's really important that scrap be able to flow freely from continent to continent to help the developing world as they industrialize.
In 2022, Nucor began shipping a net-zero product branded Econiq. How does Nucor achieve net-zero with this Econiq product, and is that Scope 1 and 2, net-zero that you're achieving?
Yeah, we were very excited to launch Econiq, it just so happens that General Motors was our first bellwether customer, but we have other customers that are also buying Econiq today. Think of it this way, Lawson, we start with a industry-leading Scope 1 and Scope 2 emissions at 0.44 tons of CO2 for every ton of steel produced. What goes into that 0.44? Well, there are some residual Scope 2 emissions, because not 100% of the energy that we consume today comes from renewable or clean energy sources. I mentioned earlier our VPPAs.
We can take the renewable energy credits that are generated from the projects that Nucor has basically made a bet to buy the power from those projects into the future to guarantee a price at which that power will be bought into the future. We take those renewable energy credits, and we can offset any residual Scope 2 emissions. There's the Scope 1 emissions. While Nucor is actively and aggressively pursuing strategies like the ones I mentioned earlier to lower that number and to get it as close to zero as possible, during this transition period, we also are able to go out onto the market and buy very high quality, third-party verified, carefully vetted offsets to offset just the small amount of residual Scope 1 emissions.
That's how we can get to net-zero for our customers when we supply Econiq. One of the really exciting things about Econiq is that Nucor is a vertically integrated steel producer, but we're also a very diverse producer of steel and steel products. We make rebar, we make MBQ, we make SBQ, we make plate, we make sheet, we make tubular products, we make buildings, we make joists, we make decking, and we make warehouse racking. We make all kinds of things. So we are able to offer our customer for the full suite of all of our products, the ability to buy a net-zero product in Econiq. It isn't just a singular product. It applies really across the full suite of product offerings that Nucor has for our customers.
Well, looking at the market context, what sort of uptake have you had and what sort of growth would you expect in that Econiq branded product in 2023 vs 2022? Finally, are customers willing to pay a premium for that?
That's the proverbial $64,000 question. You know, what we're seeing is that in certain industries, there is definitely a higher level of interest today. What I always tell people is whatever that level of interest is today, it's gonna be more tomorrow, and it's gonna be more next week, and it's gonna be more a year from now. The early adopters, I would say, who are most interested in driving toward net-zero products throughout their supply chain, it really does start with the automotive manufacturers. I have to applaud the automotive industry because for the most part, they have been very ambitious. It.
You know, in other words, they haven't just said, "We're gonna come up with a strategy to eliminate the internal combustion engine and to move toward EVs." They've said, "We're gonna go further than that, and we want to make sure that the materials that go into our products are also sustainable and low in greenhouse gases." That presents a perfect opportunity for Nucor and our Econiq product. I'd say another area we're seeing it in are in areas like HVAC and appliances, consumer-facing products where the younger generation and others like-minded are beginning to demand a more sustainable product offering. This gives us the ability to sell them an air conditioner through one of our customers that has net-zero steel. We're starting to see a little bit more traction in the construction space.
I personally believe that what's gonna drive that is not the contractors, because in general, when people are bidding construction projects, a lot of that is driven by cost and the need to try to find the lowest priced product. What we're seeing is more and more owners and developers of buildings insisting that as part of that bid process, that the products that are being used to build those buildings of the future are low in body carbon. Then I would say the last place that we're seeing it is in public procurement. You know, we're all familiar with the Inflation Reduction Act and the CHIPS Act and the other legislation that's recently been adopted in the Biden administration.
Those provisions are containing, Buy Clean, Buy America provisions in them, which I know are controversial in some parts of the world, including where I sit today. The reality is that, anything we can do to encourage people to buy products that have lower embodied carbon and incorporate them into the clean and digital economy of the future, we think is a really positive thing and certainly something that Nucor will benefit from.
Throughout all your answers is this sort of underlying theme of circular production. I'm curious to get your thoughts on how Nucor incorporates the circular economy into its production processes and other initiatives.
The most obvious start is that we use a lot of scrap. Last year, I believe we used about 20 million tons of scrap as a company. You begin to think about that number is really mind-boggling. In fact, we believe that we're the North America's largest recycler of any product, of any kind. That being said, that's been sort of, you know, embedded in our D&A since the 1960s. Nucor is constantly looking for other ways to use this concept of recycling and the circular economy to be a more sustainable company. I think of water consumption, we're fortunate that we don't operate in areas that are highly constrained in terms of access to water.
We still think that it's really important that we don't use water wastefully, and so on average, we recycle our water about 10 times. Some of the byproducts that we generate from the steelmaking process are recycled. Something like 98% or 99% of the slag that we produce is actually then used as an aggregate-type material for things like road construction and asphalt and other things like that. If you think about where we're headed with charge and injection carbon, instead of using a product that might be based on petcoke or anthracite coal, we're trying to use waste wood and using a pyrolysis process to have a carbon laden material that we can use as a substitute for those other materials, which again, creates a circular process.
You know, I think about pig iron, which happens to be the most carbon-laden raw material that we use today. Wouldn't it be wonderful if we could use pig iron that was, that, you know, that was created using renewable forestry products instead of coal. We're looking at those things in our supply chain and trying to replace them. This whole concept of circularity is very much part of our D&A. We're blessed to be in an industry where steel really is almost this infinitely recycled material. The last thing I would mention, which I'm very excited about, is there's a process where we can remove residual amounts of copper from obsolete grades of scrap.
We get this obsolete scrap, which, if you think about it, that's the stuff that comes back when you grind up used cars and washing machines and refrigerators and all that. There's some residual tramp elements that are in that scrap, which is why it's the most readily available commodity in scrap on the globe today. It also has the disadvantage of having some of these tramp elements in it. Nucor is working today on removing that residual copper so that we can still produce these advanced high-strength, more sophisticated grades of steel without having to dilute that by adding carbon-bearing materials like pig iron.
By doing that, what we found is that we can use obsolete scrap as a substitute, not only for higher grades of scrap, but we can actually use it as a substitute for pig iron. Now you take the most carbon-intensive material and you remove it, and you add something that has zero greenhouse gas impact in its place. It's really, really exciting. I think the last thing I would point to is our DRI facilities. Nucor has two direct reduced iron plants, one in Louisiana and one in Trinidad. We announced recently our intention to work with ExxonMobil in a carbon capture and sequestration project, which will remove about 60% of the residual greenhouse gases from our DRI. DRI already is about 50% the embodied carbon intensity of pig iron.
The fact that Nucor has more than 4 million tons of DRI that we can draw upon, gives us a huge advantage 'cause we've got a material that's about half, pig iron, but now we're gonna take another 60% of the greenhouse gas intensity out of that product. We believe that will give us the lowest high-quality, metallic available at scale, on the globe today in terms of DRI. We're very excited about all those things.
I wanted to touch on disclosures. As the SEC rolls out new regulatory mandates, does Nucor envision a change in the way that they report other emissions or climate risks?
Yeah, I think the way I would sum it up is, we're not afraid of any new regulations as it relates to disclosure. From the very beginning, I thought it was really important that all of our data is really carefully vetted and third-party verified. I think it's really important that companies are very transparent. We're at that point now where we just wanna know what the rules are, and then Nucor will certainly be in a well position to comply with those rules. Will it change some things? Yeah, it will. I mentioned Scope 3 earlier. We're kinda waiting to see what the new rules are gonna say about the disclosure of Scope 3 emissions, but we're already prepared to deal with it, whatever it looks like.
You know, people are probably a little bit surprised when I say this, but I think there was a recent study that was done by all public companies, something like 67% of the companies that were polled said, "You know, we really want some guidance, we want some clarity, we want a singular set of rules that everybody can play by." Nucor certainly is in that camp. We think we're in an advantaged position. We don't think it's gonna be a huge lift for us to comply, but we'll have to wait and see what's in the final rules.
Just looking at the fiscal regime and investment climate in the U.S., can you discuss the impact of the recently passed Inflation Reduction Act on Nucor's business?
Yeah, I touched on it a little bit. You know, like all government spending, these things take time, but we're now beginning to see quoting activity and activity really driving some of these large projects. As I mentioned earlier, there are some Buy Clean provisions that we hope will be fully implemented in those projects. We think that Nucor will really benefit from that. If you think about a lot of projects that fall into the Inflation Reduction Act, we have a saying at Nucor, which is that "The green and digital economy needs to be built with steel, and the steel that it's built with matters." You heard that from our video earlier.
Anything we can do to build out the future needs of our company or of our country, whether it's, you know, whether it's infrastructure and the Infrastructure Act, whether it's building new chip manufacturing facilities, whether it's building solar fields or wind farms, if we can do that using cleaner, lower embodied carbon steel, we all win. And that, unfortunately, has not been the case or the experience in the last decade. I think, you know, we're beginning to see it, and we expect to see a whole lot more of it, and we think it will be a nice tailwind for Nucor.
I wanted to pivot to the S, or the social part of the ESG equation, and ask you about Nucor's initiatives to improve the representation of diverse groups across the organization. Also, how does Nucor compare with other steel companies in the U.S. and globally?
I would say that it's a keen focus of our executive leadership. We are in an industry which isn't always best positioned to attract diverse candidates, particularly female candidates. When you think about the process of making steel, you know, one of the things that I think Nucor would say is that we have a much better track record of retaining people when they come to work for Nucor than we do necessarily getting them in the door, because today everybody wants to work in some high-tech business, something sexy, something really novel or interesting. The process of making steel traditionally hasn't been thought of that way. We're really trying to shift that paradigm, and we're having great success. I think it really starts by being very intentional and very focused.
We've partnered with a lot of diverse institutions in the United States to try to attract and drive people into careers that are well suited for steel and steelmaking. Think of some of our programs with Historically Black Colleges and Universities, our efforts to work with women's engineering groups and things of that nature. We're beginning to really see it pay off. I think in the last couple of years, something like 38% of our new general managers and managers that we've hired into Nucor have been diverse or female, and so we're making good headway. I would say we still have a ways to go. I would say that's a challenge that really faces all market participants in the steel industry.
I think those that are really more thoughtful and more intentional about it and make it clear that we welcome that we will be a much better company as a result of having a more diverse workforce, I think those are the companies that are really gonna be the winners.
Nucor includes in its mission statement to become the world's safest steel company. What are the processes being used to implement this, and what have the successes been to date?
Yeah. I should start by saying that I am extraordinarily proud that we are now on our back to back to back to back fourth consecutive record year in safety, and our injury and illness rate has, which was already leading the industry in the U.S., continues to plummet. This year is no exception. I want to be very careful and not jinx us, but we are on path to set a fifth consecutive year of record safety. It really starts with our culture. The most important value at Nucor is our people. You know, we have a saying, which is that everyone needs to be able to return home to their families every day safely.
We really try to instill this mentality that nothing is more important than safety, really, from our CEO, Leon Topalian, on down to every single person that works at our steel mill. I would challenge any of you to go visit any of our facilities anywhere in the world, and you'll come away with a certain feeling that's very tangible, and that is that there's a real feeling of caring among one another. You know, we have made it very, very clear to our teammates that anybody has the authority to shut down our operations at any time if they feel like safety is being jeopardized. Let me repeat that: Anybody in any of our operations has the ability to close down our facility if they feel like it's being operated unsafely.
That's really an unprecedented concept, if you think about it. We believe it's sort of the only way to drive home the importance, that everybody is empowered to make those decisions. I think the second thing is, you know, you're trying to combat human nature. You know, sometimes you'll experience a safety incident with a teammate who's been doing the same job for 30 years, and we'll use video, and we'll actually see the behavior that led to the injury. The teammate actually had no idea that they did what they did in order to create that unsafe condition.
Really, we're trying to get other teammates to be accountable and to hold one another accountable so that it's not enough if, Lawson, if you look after your own safety, but it's my responsibility to make sure that you don't ever put yourself or any of our other teammates in a position of safety. The other thing is, we've come up with something called red lines. You know, these are behaviors that are absolutely unacceptable at any level. We will not allow any teammate to put themselves in harm's way. The understanding is that every single person that works at Nucor, all 31,000 teammates, know and understand what those behaviors are and will not do those things.
We've hired third parties to help consult with us to build, really, our leadership skills among our supervisors, because we find that those who are on the mill floor and are able to influence behaviors on a day-to-day basis, that's the place where you really need to attack safety. It's not enough for the CEO to say, "We're gonna be the world's safest steel company." It's not enough for me to say that. It really needs to take hold and really be believed and be part of our D&A at the plant floor.
I'd like to finally move to the G part of the ESG equation. Ask about board structure. Boards in corporate America seem to be split on whether to combine the CEO and Chairman role. Nucor has a history of doing both. Currently, the role is combined into one, and I'd like to hear your views on the advantages and disadvantages of either approach.
You know, to me, ultimately, what you want is effective governance. In recent history, for example, when our last CEO retired and Leon became the CEO in 2020. He was new to the role, and he had an awful lot on his plate in running the largest steel company in North America. At that point, we thought it was appropriate, or really, the board thought it was appropriate, that we have a non-executive chair. We have a very collegial board. We have a very engaged board, and that worked out extremely well. After Leon had been in the seat for a little while, I think the board felt more comfortable and thought it was absolutely appropriate that Leon serve as also the Chairman of the Board.
We have a very, very strong lead director who's there to support Leon as well. You know, to me, you got to be a little bit careful in saying one size fits all. I think it really turns on a lot of factors, but it turns mainly on the strength of your board of directors and the governance practices that you have in place. I can see in other companies where it may be problematic to have the Chairman role and the CEO role combined. At Nucor, we've done it both ways, and we found that we can be very successful both ways.
I think if you have the same person in the chair seat, that's the CEO, you think there's just a little bit more continuity, as it relates to the day-to-day management and of the affairs of the business. I feel like we had that even when when we didn't have the roles combined, because we have a board that's very engaged and that regularly is engaged with our executive management team and really our whole management team. It's worked well for Nucor, but if for whatever reason it didn't work in the future, I don't think we'd hesitate to change it again.
I just think you got to make sure that you have a very strong and engaged board of directors, and you have a very strong and engaged CEO, if you can also make him a chair. We have both. We're very blessed.
Now, finally, at Nucor, the board's Governance and Nominating Committee is in charge of ESG and sustainability matters. Some corporate boards have started to move towards dedicated ESG working groups or even committees. Curious whether that would be something that Nucor might move in a direction toward?
You know, you never want to say never in these things, but we were very thoughtful and very engaged with our board when we made the decision to come up with the structure that we have today. You know, Nucor is a pretty lean company, really throughout our company, and the board is really no exception. You know, we have what we call Committees of the Whole, which is that all of our board members, all of our independent board members, serve on all of our committees. As a result of that, you know, we didn't really see the need to create yet another committee, because all of those board members are already involved and very engaged in ESG matters.
You know, we did look at the data, and at the time, nominating and governance committees had ESG at a much higher percentage than, say, the audit committee. You're now seeing a trend, probably as a result of some of the proposed SEC guidelines, that maybe more companies are now putting that on the audit side of things. Then, of course, there are many companies that are forming standalone committees. We're not big on creating committees. We never have been. What we think is much more important is that all of our board members are really engaged and that they're regularly updated. I attend every board meeting and cover ESG in every single board meeting with our board. As long as you have that, I think where you put it is less important in my view.
You know, we know there are other perspectives on that. I think if we had a much larger board or we had a board where only board members only sat on certain committees, then it might make more sense to create a new committee. We just don't have that at Nucor.
Fantastic. Thank you, everybody, for being here today. Greg, especially thank you to you for your insights here today.
Really appreciate it. Thank you.