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Magazine7 Min

“ESG is about doing better every day”

As CFO of SMS group, Fabíola Fernandez is in charge of ESG. We talk to her about embedding the subject into the corporate strategy, dimensions of diversity, and how ESG and financial performance fit together.

ESG reporting is a major topic for all companies in the European Union. How do things stand here at SMS?

Fabíola Fernandez: As a European company, we must publish our first sustainability report in 2026, accounting for our global activities in 2025 in accordance with ESG criteria. We have now put in place the conditions for this and have positioned ourselves in such a way that we meet current and future requirements of regulatory authorities and other stakeholders.

We do not see ESG as a mandatory program only, but as an integral part of our strategy and corporate culture. The subject goes far beyond mere compliance with regulations. We analyze what customers, banks, or employees expect from us, and from this we derive what action to take. We also think about what we want to do in addition to realizing our own goals and values. Although we started the formal ESG process just over a year ago, we are not starting from scratch in many areas.

You say ESG is part of the SMS culture and strategy. Can you give examples of this?

If you take the wide-reaching subject of “environmental”, we initially approached this from the customer’s perspective. Our products, projects, and services are the biggest levers for reducing global greenhouse gas emissions. “#turningmetalsgreen” lies at the heart of our corporate strategy, and with our technologies and projects, we are a pioneer for decarbonization and the circular economy. In this context, we are also working on a product carbon footprint for our plants and equipment.

The topic of “governance” is also firmly anchored in our company. For a long time now, we have been implementing very effective guidelines and clear processes, and naturally we follow all the rules of good governance. Moreover, we are now integrating ESG criteria into other processes, starting with mergers and acquisitions as well as purchasing.

You mentioned the emissions produced by SMS plants in customers’ facilities. What about our own greenhouse gas footprint?

As with all topics, we are taking a three-step course of action with regard to greenhouse gas emissions and the use of other resources. The first step is fact-finding, which we successfully completed earlier this year. We record all consumption figures and calculate our own emissions. The second step is comparability: Where does SMS stand when benchmarked against other companies? In the final step, we lay out goals and derive concrete steps toward achieving climate neutrality. Not least, it is a question of credibility. At the same time, we can say that some of our locations, for example Hilchenbach, already started implementing concepts for future net-zero emissions targets a few years ago.

ESG and financial performance fit better together than many would think.

Let’s turn to the “social” pillar of the ESG strategy. Including yourself, two of the five members of the Managing Board are women, yet generally SMS does not come across as being a particularly diverse company. What is your opinion on this?

I see this somewhat differently, because there are different dimensions to consider here. In terms of cultural diversity, we are a very diverse company with 60% of our employees based outside Germany. In recent years, SMS has grown from a German company with foreign subsidiaries into an international company in which all locations and employees assume responsibility and make an important contribution to the group’s success. We also promote cultural exchanges, for example through targeted programs such as job swaps between locations.

If you take gender diversity, the proportion of women in Germany is quite low. That being said, as a technology company, we are not in an easy starting position either, because technical and engineering careers are still very male-dominated. Nevertheless, we are trying to bring more women on board through targeted recruiting, especially for technical professions as well as for management positions. Not only that, we provide our female employees with specific support as part of in-house measures, for example funding programs set up around the world that cover all career stages. We consistently address this topic, but we also want to keep our primary focus on creating equal opportunities for everyone and raising awareness of the subject within the company. A few years ago, for example, we signed the Diversity Charter, a German initiative that resonates across the whole organization.

What specific steps are planned next?

At the moment, the focus is on working on our ESG reporting, because for us, establishing our position is the starting point on the path to true business sustainability. We can only manage what we know. Only if we know where we stand can we set ourselves goals and gradually improve.

The next concrete step we plan to take soon is to join the United Nations Global Compact and, in doing so, commit ourselves publicly to complying with social and environmental standards. In addition, we plan to have an external sustainability rating assessment drawn up by one of the leading providers. However, our work in ESG is a never-ending process – and that is a good thing. Sustainability is a continuous journey on which we can achieve an ever greater, positive impact by getting actively involved and taking appropriate action.

As CFO, the focus is on financial performance. How do these two topics fit together for you?

ESG and financial performance fit better together than many would think. For me ESG means first and foremost that we work on our quality. By reducing our energy consumption, we also lower our costs. If we have diverse teams in place, better decisions can be made. When we reject corruption, we reduce the risks for our business. And the whole company benefits when we treat employees well or minimize health problems. ESG is about doing better every day. Which is why it fits perfectly with our financial performance and our corporate philosophy. 

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