**Corporate Social Responsibility Reporting in the Context of Striving to Achieve the Sustainable Development Goals**

#### **Bartosz Orzeł and Radosław Wolniak**

#### **1. Introduction**

Nowadays, more and more emphasis is placed on economic development in line with the idea of sustainable development. The growing energy demand and the increasing depletion of resources in the world have led international organizations and governments of various countries to take steps related to sound management and rationalization of resources (Chen et al. 2018). Corporate social responsibility seems to fit perfectly into the sustainable management of a company. According to research conducted by Cinˇcalov ˇ á and Prokop in 2020, the most accurate term to describe corporate social responsibility is "an optional concept of socially responsible conduct beyond the legitimate commitments of the company that integrates the social, environmental and economic part and therefore it satisfies the objectives of all the interested parties" (Cinˇcalov ˇ á and Prokop 2019). The year 2000 until now has been the time of business ethics transformation all over the world (Van Marrewijk 2003). From the business management point of view, corporate social responsibility (CSR) has become a strategic tool more than an option. Motivating factors for corporate social responsibility to undertake different activities include external and internal pressures and demands (Halkos and Nomikos 2021; Tai and Chuang 2014; Streimikiene et al. 2019; Lu et al. 2021). Many enterprises choose corporate social responsibility reporting because of the potential benefits connected to this activity. One of the main reasons is its usefulness for public relations. Effectively communicating social and ecological efforts, which corporate social responsibility reporting can carry out, is a great tool that works as customers' and stakeholders' "trust extractor" (Sprinkle and Maines 2010; H ˛abek and Wolniak 2015; Navickas and Kontautiene 2012; Valackiene and Miceviciene 2011). It is worth noting that the economies of Central and Eastern Europe after the collapse of the Soviet Union first had to overcome the path of systemic transformation. At the time when corporate social responsibility was beginning to develop in Western countries and the first GRI (Global Reporting Initiative) guidelines were created, the free market economy was just beginning to exist in the countries of the former Soviet Union. This is a huge

change that has opened up these markets to the rest of the world. Nevertheless, the regulations imposed by these governments, which often enforced some type of corporate social responsibility, have ceased to apply for some time (Aluchna et al. 2009). The very fast system transition and industrial restructuring process in connection to privatization has been one of the considerable causes for the following issues in the former Eastern Bloc countries (Aluchna et al. 2009; International Business Leaders Forum 2004; Belyaeva 2013):


Nevertheless, the globalization of industry, the flow of information and the benefits for enterprises and entire sectors of the economy that result from responsibly conducting business have made good business practices and concern present in an increasing number of enterprises belonging to both the public and private sectors (Kinderman 2011; Stoian and Zaharia 2012). There is a strong need to strive for sustainability, managing business activities in such a way as to ensure that the needs of the present generation are met without reducing the chances of meeting the needs of the next generations (Sarkar 2008). Reviewing the literature shows that there is a research gap in the area of a clearly defined correlation and connection between CSR reporting and the documentation and achievement of the Sustainable Development Goals by enterprises. It is necessary to sort and manage knowledge in this area and conduct research based on various methods and tools in the field of the impact of corporate social responsibility reporting and non-financial data on the achievement of the Sustainable Development Goals.

#### **2. Results**

This paper is a study on corporate social responsibility as part of a sustainable approach to modern management. In the first part, a literature analysis was carried out. We included issues related to the different ways in which enterprises can achieve the Sustainable Development Goals. The next part of this paper contains a literature analysis on different types of non-financial activities which can help business entities to improve the quality of their corporate social responsibility reporting. The issues connected to effectiveness in environmental and social efforts taken by enterprises are raised. The most common methods and areas of non-financial data reporting by enterprises are introduced, and statistical data of corporate social responsibility reporting in different European contexts are presented. This paper is focused on the corporate social responsibility principles and corporate social responsibility reporting impact on achieving the Sustainable Development Goals. In this part of the publication, both aspects of corporate social responsibility reporting principles and the idea of corporate social responsibility reporting's influence on achieving the Sustainable Development Goals are presented. Finally, the conclusion and findings are introduced.

The contemporary approach to corporate social responsibility reporting should be focused not so much on reporting non-financial data for the sake of mere fact, but on a clearly defined goal, which is the pursuit of sustainable development. The correct understanding of corporate social responsibility by customers and stakeholders is one of the ways to achieve the Sustainable Development Goals in the correct (ethic) way (Arenas et al. 2009). On the other hand, higher awareness of customers and stakeholders in the field of social responsibility makes enterprises have a limited ability to manipulate, conceal data or make empty promises, which turn out to be only marketing gimmicks (Servaes and Tamayo 2013). The research conducted by Servaes and Tamayo in 2013 was connected to the roles of customers and their awareness as impacts on organization value. The presented findings clearly showed the following (Servaes and Tamayo 2013):


Awareness of CSR principles is established at the beginning of corporate social responsibility implementation. Companies which are not prepared to change their long-term strategy or organizational culture and which are not oriented to sustainability are at risk of encountering the above-mentioned issues. The level of these principles' application is institutional and is connected to the company's basic obligations as a business organization. Principles define business entities and their social relationships. The major elements of corporate social responsibility principles are as follows (Hopkins 2004; Blindheim and Langhelle 2010; Wood 1991):


The other aspect of participating in corporate social responsibility is reporting non-financial data. According to the GRI guidelines, there are six major reporting principles which have a significant impact on corporate social responsibility reporting quality. In Table 1, these principles are introduced with descriptions.

Research conducted by Moravcikova in 2015 showed that corporate responsibility is present in annual financial reports in 51% of all researched companies. According to this paper, the audit consulting company KPMG surveyed the 100 largest companies (according to their incomes) across 41 countries. Corporate responsibility reporting in these companies was investigated based on detailed research on each company in terms of the efficiency of reporting non-financial data. Additionally, issues such as factors which influence CSR (corporate social responsibility) reporting, sector variances and use of GRI standards and guidelines were mentioned in the publication (Lu et al. 2021, Lu et al. 2021). The other interesting results introduced in this paper were the rates of corporate responsibility reporting in European countries in 2011 and 2013. According to the article, most companies reporting CSR in Europe are active in the USA (76%), in Europe (73%), in the Middle East and in Africa (54%) (Moravˇcíková et al. 2015). The rate of CSR reporting in the year 2013 in Europe is shown in Figure 1.

**Table 1.** Corporate social responsibility reporting principles according to the GRI guidelines.


Source: Authors' compilation based on: GRI 2000–2006 (Orzeł 2020), (Orzeł 2020; Global Reporting Initiative 2006).

**Figure 1.** Corporate social responsibility reporting in different countries of Europe in the year 2013. Source: Authors' compilation based on Moravˇcíková (2015).

In the next figure (Figure 2), the number of reports submitted in chosen European countries is presented.

**Figure 2.** Corporate social responsibility report numbers in different countries of Europe in the year 2013. Source: Authors' compilation based on Orzeł (2020).

The other important issue connected to corporate responsibility is employees' satisfaction and awareness of "meaningful work". This is an issue closely related to a phenomenon concerning the organizational culture. Both the issue and theoretical model were described by Raub in the article "The Power of Meaningful Work" in the year 2013. The theoretical model was based on the correlation between CSR awareness, task significance and job satisfaction connected to these positive issues. In the model, five hypotheses were introduced (Raub and Blunschi 2014):


The research was conducted in four hotels with a total of 330 employees, which were asked to participate in the survey. Descriptive statistics and analysis showed that, from the point of view of hospitality industry practice, added value may be achieved when employees are aware of their workplace's participation in corporate social responsibility. Employees can gain numerous benefits in the form of greater engagement in discretionary work behaviors and improved job attitudes. This, in turn, directly translates into general job and life satisfaction (Supanti and

Butcher 2019; Binswanger 1998). This issue has become extremely important in the case in which sustainable development is understood as a healthy workforce, non-exploitation and all ethical issues related to work, decent wages and employment (Feng and Saini 2015; Vance and Paik 2015; Virakul et al. 2009). Therefore, one of the socially responsible corporate activities begins in the center of the organization—in employment rules and ethics of work. Such an approach is part of human rights responsibility (Eun et al. 2013). Enterprises showing a willingness to conduct business in a socially responsible manner and to report non-financial data in this area may take advantage of the many opportunities and ways to implement elements of the pursuit for sustainable development. In Table 2 the different categories of corporate social responsibility and examples of activities are presented (Tilt 2016; Corporate Financial Institute (CFI) 2021).


**Table 2.** Corporate social responsibility categories and examples.

Source: Authors' compilation based on Corporate Financial Institute (CFI) (2021); Tilt (2016).

However, activities assigned to specific areas of corporate social responsibility must have their order and hierarchy to maximize the degree to which activities related to corporate social responsibility correspond to the actual capabilities of the

enterprise (Faracane 2015). In Figure 3, the hierarchy of corporate social responsibility categories in the form of a pyramid is presented (Carroll 1991).

**Figure 3.** Hierarchy of corporate social responsibility categories. Source: Adapted from Faracane (2015); Carroll (1991).

Studies conducted by Carroll in 1991, which were connected to the elements of corporate social responsibility, described the importance of economic, legal, ethical and philanthropic responsibility issues. These "important elements" seem to still be present nowadays and can be considered as guidelines for the effective undertaking of socially responsible activities that can bring sustainability and benefits to both the entire society and the company. These components are introduced in Table 3.


#### **Table 3.** Corporate social responsibility types.

Source: Authors' compilation based on Carroll (1991).

The other aspect of corporate social responsibility is non-financial data reporting and its quality as part of sustainability. The quality of corporate social responsibility reports is determined on the path from data processing, through implementation and reporting, to the final result. The quality of these reports can be viewed as equal to the completion of information that the reports contain (Orzeł 2020; H ˛abek and Wolniak 2015; Szczepa ´n´ska 2018; Wolniak 2018; Tschopp and Huefner 2015). The research

conducted by van Buuren in 2019 clearly showed that most companies which report non-financial data used GRI (Global Reporting Initiative) and SDG (Sustainable Development Goal) standards. More companies decided to focus on "sustainable targets" on which they want to work and in the field they want to improve. GRI (Global Reporting Initiative) standards were also used for reporting by 59% of the researched companies in comparison to the previous years (49%). Nevertheless, SDG standards seemed to be slightly more popular. GRI standards were used by 59% and SDG standards by 70% of the researched business entities. It is worth adding that these are increases of +7% and +12% in comparison to the previous year. According to the presented research, there is a trend in the evidence towards aligning the strategy of the company with the SDGs. The author of the report "Survey on CSR Reporting in Europe" carried out a survey to assess the current sustainability reporting status of 312 European companies (Tschopp and Huefner 2015). Additionally, the tendency to accept targets of sustainability is still present. Data connected to companies' interest in sustainable energy usage target declarations are very interesting. Nearly 45% of companies are interested in renewable energy targets, 90% in greenhouse gas emissions and 41% in supplier audits (van Buuren 2019). These data are presented in Figure 4.

**Figure 4.** Targets declared by companies in the field of sustainability (environment). Source: Reprinted from van Buuren (2019).

Only 43% of all researched organizations communicate multiple measurable non-financial targets. Reducing greenhouse gas emissions is the most popular target among companies. Activities connected to social targets are less popular than "ecological" targets. The other aspects are the areas of corporate social responsibility targets set by enterprises. The percentages of companies that declared CSR targets in different areas in the year 2019 are presented Figure 5.

Percentage of companies that set CSR targets

**Figure 5.** Percentages of companies which set CSR targets in different areas. Source: Authors' compilation based on van Buuren (2019).

Between different countries, a few large differences can be observed. Portugal and Italian companies' information about their sustainability targets is very rare. France and Switzerland have a great score in this aspect. Organizations from sectors such as consumer staples, industrial and utilities achieve the highest level of reporting their sustainability targets. Companies from sectors such as energy, consumer discretionary and financial are worse in this issue (Tschopp and Huefner 2015; van Buuren 2019). However, despite the higher scores in the level of non-financial data reporting than in previous years, there are a few challenges and issues which need improvement (van Buuren 2019):

1. Improvement in sustainability performance communication.

The clearness of reports could be at a better level. Many companies do not provide a summary of their sustainability achievements at the beginning of their reports.

2. Improvement in performance data communication.

Numerous enterprises show their raw data in reports. However, there is a lot to achieve in this area, especially according to the renewable energy issue, material usage and supplier audits. The issue of greenhouse gas emissions is the issue most often reported and presented.

3. Low differentiation in non-financial data reporting types.

Only 43% of all companies communicate multiple measurable non-financial targets. Greenhouse gas emissions are the most disclosed target. Social targets are the least frequently declared as the goal of sustainable development.

4. The need for materiality communication expands.

A total of 54% of researched companies communicate areas of importance. Topics such as economic and social issues appear most often. Environmental issues are least commonly found on the Top 5 priority lists.

5. Disproportionate interest and reporting.

Even though social topics are at the top of the "Top 5 priority lists", companies have trouble effectively communicating quantitative social data in comparison to environmental data and targets. Instead of social data, companies prefer to report environmental data.

#### **3. Discussion and Conclusions**

Reporting non-financial data is becoming more and more popular in many countries, both in Europe and around the world. Attention should be paid to the reliability of data reporting by enterprises, and to the goals they set. The completeness of the information contained in the reports, particularly compliance with the GRI (Global Reporting Initiative) and SDG guidelines, plays a huge role in reporting corporate social responsibility. Referring to the data presented in this publication, it can also be observed that the European leading countries in submitting corporate social responsibility reports are Germany and the United Kingdom. Additionally, studies have shown that the process of corporate social responsibility should be rooted in the organization's culture and long-term strategy. The other aspect is the hierarchy of responsibility. Companies must firstly pay attention to economic aspects, and then legal, ethical and philanthropic aspects. This order of the analyzed categories was presented in the form of a pyramid. Next, principles of different aspects of responsibility were described and examples were introduced. The analyzed literature shows that properly prepared and truthful CSR reports can be considered as a source of useful documentation, and because of this, we can observe the positive contributions of a company's efforts to building a business aimed at sustainability. The types of help for companies which want to report corporate social

responsibility in the proper way are the GRI and SDG standards. They are very helpful, and most companies are now reporting their non-financial data according to these principles. The introduced results of previous research also show that there is a correlation between companies' "sustainable" strategy and the reporting of corporate responsibility according to reporting standards. Another result found in the literature analysis is the fact that enterprises most willingly report data related to greenhouse gas emissions and measurable environmental issues, although social issues are very high in the hierarchy of goals defined by companies and the most important in the context of activities for sustainable development. However, their reporting is much less popular among enterprises than environmental data.

The presented studies introduced various research results, which come from the big business sector. It is also worth researching the approach of medium and small enterprises to sustainability in the context of corporate social responsibility reporting. Research conducted by Linch in 2011, and also by Kechiche and Soparnot in 2012 using a similar methodology, which is based on a literature review, presented the different aspects of corporate social responsibility in the medium and small enterprise sector. The conclusions drawn were as follows (Kechiche and Soparnot 2012; Vo 2011):


Another study conducted by Stekelorum in 2020 showed that medium and small enterprises have a significant impact on CSR due to their role in supply chains. The author emphasized that issues such as owner management, limited resources, personal relationships and informality are reflected in the management practices of small and medium-sized enterprises. Additionally, the author conducted a study on the types of methods which are used in papers connected to corporate social responsibility submitted to different journals. The results showed that most research papers in this field use case studies and survey methods (see Figure 6) (Stekelorum 2020).

**Figure 6.** Different types of methods which are used in papers in the CSR reporting field. Source: Reprinted from Stekelorum (2020).

The influence of corporate social responsibility on sustainable development with the example of the Global Reporting Initiative reporting guidelines was presented in the publication titled "Global Reporting Initiative (GRI) as recognized guidelines for sustainability reporting by Spanish companies on the IBEX 35: Homogeneity in their framework and added value in the relationship with financial entities". This research presented an interesting approach to non-financial data reporting, which shows that the GRI guidelines can be treated as help in the process of reporting on sustainability by companies (Ortiz and Salvador 2014). It is worth paying attention to the votes for and against CSR. The research conducted by Kope´c in 2016 indicated a different point of view regarding CSR. In her publication, Kope´c distinguished the following groups of arguments against CSR (Kope´c 2016);

• Socio-economics arguments: These represent the approach and point of view of people who believe that the company should focus on bringing profit, acting only in accordance with applicable law and social and ethical standards. Each time there is commitment to social rights, etc., it is dictated by the desire for profit.


Another issue that concerns CSR is the accompanying business behavior. The authors of this article also conducted a literature review on greenwashing and plan to develop research towards its impact on achieving dishonestly better results in reporting corporate social responsibility. The aforementioned publication concerns an overview of the tools, forms and strategies used by enterprises to unfairly obtain a competitive advantage. Greenwashing itself can affect the reliability of CSR reporting and distort the true image of a company's environmental activities in the eyes of customers and shareholders (Orzeł and Wolniak 2019).

**Author Contributions:** Conceptualization, B.O. and R.W.; methodology, B.O.; software, B.O. and R.W.; validation, B.O. and R.W.; formal analysis, B.O.; investigation, B.O. and R.W.; resources, B.O. and R.W.; data curation, B.O.; writing—original draft preparation, B.O.; writing—review and editing, B.O. and R.W.; visualization, B.O.; supervision, R.W.; funding acquisition, B.O. and R.W. All authors have read and agreed to the published version of the manuscript.

**Funding:** The analysis in this publication was conducted in the course of the internal research project of Silesian University of Technology project 13/010/BK\_21/0057. The analysis in this publication was conducted in the course of the Polish government project: "Inicjatywa Doskonało´sci, Uczelnia Badawcza", title: Badanie Poziomu Jako´sci Swiadczenia Usług w ´ Sl ˛askich Przychodniach w Czasie Pandemii COVID-19. ´

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**


© 2023 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).

### **Changes in the Steel Industry in Poland in the Period 1990 to 2020: Innovation and Digitisation on the Way to Steel Mills 4.0**

**Bozena Gajdzik ˙**

#### **1. Introduction**

In times of economic system transformation in Poland (such as in the 1990s), enterprises functioning across all branches of industry have transformed considerably. The transformations to market economy have a deep and radical character. The range of restructuring comprises all areas of the functioning of Polish enterprises. The restructuring changes are in technology, production, work, organisation and management. The changes were also present in the steel industry in Poland. The restructuring process in the steel industry consisted of the de-indebtedness of enterprises, reduction in employment, reduction in production volumes, withdrawal of old (uneconomic) technologies and enhancing productivity. Before the transformation of the economy in Poland (before 1989), there were no economic incentives for cost reduction, process optimisation, efficiency or profitability. Business objectives very often had political significance (Krajewski 2009). Production costs were high, too many workers were employed in steel mills, and the manufacturing technology was outdated and degraded the natural environment. Restructuring of the metallurgy industry in Poland started after 1990. Government programmes for the steel sector were implemented after that year. The time of restructuring of the steel industry in Poland included several distinct periods: In the first period, from 1992 to 1997, the Restructuring Programme for the Polish Steel Industry—developed in 1996 as part of the 1997 Industrial Policy—was implemented. In the second period, from 1998 to 2020, the "Restructuring Programme of the Iron and Steel Industry in Poland" was implemented. The document complied with European Union policy (this was during the period of Polish accession to the EU). The main objectives of the programme were the reduction in employment and the privatisation of steel mills. The next versions of the programme were presented under simplified titles: "Update 2001", "Update 2002", "Modification 2002". In the third period, from 2003 to 2007, the last programme "Restructuring and development of the steel industry until 2006" was implemented (Gajdzik 2012). In 2007, the European Commission recognised the completion of the restructuring

process of Polish metallurgy (document: COMP/2006/SI2.435836). In the period 2007 to 2010, the EU continued to monitor the situation in the steel sector in Poland. The supervised restructuring of the steel industry in Poland was therefore finally completed in 2010 (Szulc 2014). The steel industry was adopted to situate itself in the European steel market (Gondys and Slusarczyk 2010); In the next decade (2010 to ´ 2020), Polish steel mills, already privatised and integrated into the structures of strong foreign capital groups in the global steel market (the largest steel producers in Poland belong to foreign owners: ArcelorMittal, CMC, Celsa) (Gajdzik and Sroka 2012), began their path to building competitiveness in the steel market. Building competitiveness, steel mills have implemented new technological investments (BAT) according to the principles of sustainability (Gajdzik and Burchart-Korol 2011; Kłosok-Bazan et al. 2015). The quality of steel products and innovative products play a special role in conducting business. Steel mills value human resources (mainly the knowledge and competences of employees and leadership skills of managers) and intangible resources (e.g., market position, organisational values, intellectual capitals, advanced technologies, and know how). Innovation and resources are very important in building the competitiveness of steel mills. In a market economy and under conditions of strong competition, innovation is understood very broadly, e.g., the implementation of new or improved products and services, better processes, new methods and techniques, new organisational and economic practices, better workplaces, and new relationships in the value chain (Popa et al. 2010). The purpose of this article is to present the path of change in the Polish steel sector from the 1990s to now. The current activities of the steel branch in the world are aimed at creating steel mills 4.0, according to the concept of Industry 4.0 (I 4.0) (Peters 2017; Zeman 2017). In 2011, Professor Henning Kagermann proposed the German term: "Industrie 4.0". The term evolved into a strategy for the development of German industry. Industry 4.0 is, first, new technologies, such as robotics and automation, 3D printing, collaborative robots (cobots), cloud computing and the Internet of Things (IoT). Moreover, Industry 4.0 is a new paradigmatic concept of changes in factories towards smart factories in the future (Kagermann et al. 2011, 2013a, 2013b). The practical part of the chapter is divided into three parts. The first covers the period 1990 to 2000, the second from 2000 to 2010, and the third until 2020. The main aim of this chapter is a presentation of the level of digitalisation in the steel industry in Poland. At present, in Poland, the steel sector is investing more strongly in IC systems and digital technologies. Currently, Polish mills are considered to be operating as steel mills 3.0, similarly to many European steel mills (Peters 2016), and strategies moving towards Industry 4.0 have been adopted and implemented in the steel mills. As digitisation prepares the environment for Industry 4.0, it is necessary to analyse the level of development of digital technology in separate industries in order to determine the level of maturity (Schumacher et al. 2019).

#### **2. Background of the Topic: Innovation and Digitisation on the Way to Steel Mills 4.0**

Around the world, the Fourth Industrial Revolution is underway, which is building Industry 4.0. In Industry 4.0, there will be constant communication and data exchange between sensor and sensor networks and management software throughout the entire production process, from research and product development to post-sales services. Real-time data will not only be collected, but also analysed and converted into immediate reactions that will be enacted between smart factories, products and users throughout the production chain, as well as throughout the product life cycle. Failure to implement Industry 4.0 solutions, i.e., multiple innovations and digitalisation in factories and companies, will cause the organisation to stagnate in relation to its competitors. In a market economy, companies successfully apply the latest products and IT solutions. Industry 4.0 is based on many pillars. Erboz (2017), and Burrell (2019), (as well as many other authors not cited here) have described the main pillars of Industry 4.0 in their publications. Technological innovations related to Industry 4.0 do not concern one group of technologies, but many technological solutions, referred to as technological components. The technology of Industry 4.0 consists of technologies connecting physical and digital objects, advanced network solutions, data processing technologies, and technologies relating to physical and digital processes (Culot et al. 2020). Although digitisation was one of the technical achievements of the Third Industrial Revolution, it has gained more application in the Fourth Revolution, now it is highly intelligent. The impact of digitisation is major; many companies believe it is vital to follow digitisation trends in order to stay competitive in terms of effectiveness, growth and prosperity (Vernersson et al. 2015; BCG 2017). Digitisation together with the Internet, mobile application, Industrial Internet of Things (IIoT) and services (IIoS) are building new communication environments (Wollschlaeger et al. 2017). This new digitisation is smarter and more intelligent, but as cited by Darvishi et al. (2021), many technical aspects have not yet been explored in terms of usability, e.g., sensor defect detection. Industrial digitalisation working together with Industry 4.0 technology is the basis for a mature model of manufacturing companies (Schumacher et al. 2019). According to Schumacher et al., the maturity of companies using digitalisation concerns many aspects of business, e.g., communication (Weber et al. 2017), Maintenance

4.0 (Nemeth et al. 2018), business processes (Jochem et al. 2011), Internal Logistics 4.0 and the supply chain (Klötzer and Pflaum 2017) using digital information systems (Proença and Borbinha 2016), software landscapes (Leyh et al. 2017), and big data (Comuzzi and Patel 2016). Digitalisation in manufacturing requires the use of modern production management systems and software, enabling the real-time observation of processes and immediate reactions to undesirable actions. In the steel sector, digital technologies can be applied in order to increase the flexibility and reliability of industrial processes and improve the product quality. Digital technology can also be used for monitoring and assessing the environmental performance of steel industry organisation processes improving control levels of production and of auxiliary processes that have major environmental impacts (Peters et al. 2019). Those technologies should also provide key performance indicators for resources efficiency, e.g., energy (Wolniak et al. 2020; Gajdzik and Sroka 2021). Digital business respects the principles of sustainability. The popularized concept of Industry 4.0 is based on the goals of sustainable business (Gajdzik et al. 2020). Digital technology improves operational performance and reduces process safety accidents (Lee et al. 2019). Steel mills using digitalisation can expect, similarly to other companies, benefits such as reduced resource consumption and process optimisation, shorter machine downtime and longer machine life, higher employee productivity, reduction in time between different production stages, reduction in overproduction, acceleration of R&D processes thanks to 3D printing, elimination of supply constraints, lower inventory storage costs, and better production quality (Gajdzik and Sitko 2014). Such benefits are possible because modern digitalisation solves problems and eliminates errors in real time. In today's digital economy, the link between demand and supply is better. Companies use various methods to analyse and create demand (marketing automation systems). Technology improves demand forecasting quality and reduces the time to market. With 3D printing or concurrent engineering, it is possible to prototype new products very quickly and enter the market with them. Digitisation is also a better after-sales service and service, thanks to remote servicing or guided self-service using augmented reality (more information is in the IDC report, and the report on gov.pl). Enterprises in Industry 4.0 have initiated the digitisation in manufacturing and are striving to be a part of the digital ecosystem.

#### **3. Polish Steel Industry in the Period 1990 to 2000: A Brief Description of Difficult Ways to Market**

In the first decade analysed, many quantitative changes were realised in steel mills in Poland. In 1990, the sector employed 147,000 people. In 2000, there were

38.7 thousand people employed. The reduction in employment was accompanied by a decrease in steel production, which increased productivity (amount of steel per employee). In 1990, 13.6 million tonnes of steel were produced 10.5 million tonnes of crude steel, productivity 271.3 tonnes per employee, compared to 91.9 tonnes per employee in 1990, an increase of 179.4 tonnes per employee (Gajdzik 2013). More automatic operations were introduced into the applied steel melting technology. The production lines in mills were extended with BOF technology—these were the so-called continuous casting lines (Polish abbreviation: COS). The share of this technology in the production of semi-finished steel products in the mills in the early 1990s did not exceed 5%. Expenditure on investments in technologies, products and processes in Polish steel branch in the years from 1992 to 2000 amounted to PLN 7.5 billion. At that time, many steel mills in Poland had financial debts to suppliers and organisations. These debts were repaid by, for example, selling off the steel mills' redundant assets, in particular, non-productive assets (non-core business). In the 1990s, outsourcing activities—the separation of companies from production enterprise—intensified in Poland (Foltys 2007). Steel mills that did not achieve profitability or did not cope in the market with the new unbundled, self-managed business went bankrupt. This was the most difficult period of transition for the Polish steel sector (Pałucha 2012). Figure 1 compares the expenditure on technological investment in the Polish steel industry with productivity (amount of crude steel per employee) in the analysed period.

**Figure 1.** Investment and productivity in the Polish steel industry in the period 1990 to 2000. Source: Author's compilation based on data from HIPH (n.d.). Reports: *Polish steel industry.*

#### **4. Polish Steel Industry in the Period 2000 to 2010: Visible Indicators of Competitiveness**

During this period, many changes were introduced to improve the competitiveness of steel plants, and foreign capital contributed to these changes. The most important event of this period was the purchase of steel plants by foreign investors. In 2004, Mittal, now ArcelorMittal, entered the Polish market (on 29 May 2007, a steel producer brand named ArcelorMittal was officially launched on the Polish market) (Slusarczyk and Kot 2011). A year earlier (in 2003), the CMC ´ group (Commercial Metals Company) appeared. In the same year, the Spanish Celsa acquired the Ostrowiec steel mill. Foreign capital owns the largest steel mills in Poland (Gajdzik and Sroka 2012). The open market economy with external and internal factors inspired the steel enterprises in Poland to introduce changes. The changes introduced in steel enterprises are shown in Figure 2. The main areas of change included: product range, manufacturing technology, organisation and management, and even company culture.

**Figure 2.** The key fields of changes in steel mills in Poland on their way to competitiveness. Source: Figure by author.

In 2002, the technology—created by Martin Siemens—for smelting steel in open-hearth furnaces was withdrawn. Since 2003, crude steel in Poland has been produced using only two processes: EAF and BOF. The volume of steel produced is constantly adjusted to market demand. The trend in steel production has seasonal variations (cycles). Figure 3 shows the volume of manufactured crude steel in Poland from 2000 to 2020.

In the period 2001 to 2010, investment expenditure amounted to PLN 8.8 billion. Expenditure on technological investments and process innovations resulted in an increase in labour productivity (Figure 4).

**Figure 3.** Manufactured crude steel in Poland in the period 2000 to 2020. Source: Author's compilation based on data from yearly reports 2000–2020 (WorldSteel Association n.d.).<sup>1</sup>

<sup>1</sup> Steel in figures from 2000 to 2020. Available online: https://www.worldsteel.org/steel-by-topic/stat istics/World-Steel-in-Figures.html (accessed on 23 September 2021).

**Figure 4.** Investment and productivity in the Polish steel industry in the period 2001 to 2010. Source: Author's compilation based on data from the Polish Steel Association yearly reports 2001–2010 (HIPH n.d.).<sup>2</sup>

#### **5. Steel Industry in Poland in the Period 2010 to 2020: Innovation and Digitisation Determinants for the Strategic Direction of Steel mills 4.0**

The year 2009 (two years after the global financial crisis—GFC, that started in the United States) was difficult for Polish steel mills—a drop in production (Figure 3) was caused by the global financial crisis of 2007–2008. In 2010, investment expenditures of steel mills were four times lower than in 2007 (when expenditures were the highest—Figure 4). During the crisis management period, the steel mills in Poland introduced cutting strategies (Gajdzik 2014). In investments, the increase in spending started from 2011 in the Polish steel sector (Figure 5). From 2005 to 2018, there was an increase in R&D spending (almost sixfold) (Figure 6).

<sup>2</sup> https://www.hiph.org/ANALIZY\_RAPORTY/liczby.php (accessed on 29 September 2021).

**Figure 5.** Investment and productivity in the Polish steel industry in 2011–2019. Source: Author's compilation based on data from the Polish Steel Association yearly reports 2011–2019 (HIPH n.d.).

**Figure 6.** Expenditure on R&D and innovation in the Polish steel industry in 2005–2018. Source: Author's compilation based on data from Statistics Poland (2020).<sup>3</sup>

 Use of information and communication technologies in enterprises in 2020. Available online: https: //stat.gov.pl/obszary-tematyczne/nauka-i-technika-spoleczenstwo-informacyjne/spoleczenstwo -informacyjne/wykorzystanie-technologii-informacyjno-komunikacyjnych-w-jednostkach-adminis tracji-publicznej-przedsiebiorstwach-i-gospodarstwach-domowych-w-2020-roku,3,19.html (accessed on 23 September 2021).

Expenditure on innovation in the steel industry in Poland doubled in the period 2005 to 2018 (Figure 7). New products, processes, services have had a positive impact on the steel business in Poland. Product and process innovation are closely linked with IT. Digitalised plants use sensor technology, digital production-controlling tools and AI diagnostics to monitor smart components. Each process in the plant is continually analysed and refined for incremental improvements in efficiency. Output is optimised for maximum overall performance.

**Figure 7.** Expenditure on innovation in the Polish steel industry in the period 2005 to 2018. Source: Author's compilation based on data from Statistics Poland (2020).

In the analysed period, steel mills in Poland invested heavily in digitalisation. Information and communication technologies used in the steel industry in Poland involve computers; Internet access, including broadband and mobile; companies' own websites; e-government/administration; enterprises purchasing cloud computing services; enterprises using social media; ERP systems; and CRM systems. Based on statistical data, the usage of ICT in the steel industry is presented (Figure 8).

**Figure 8.** Use of ICT in the metal industry in Poland. Source: Author's compilation based on data from Statistics Poland (2020).

The use of computers, e-government, collaboration and communication via the Internet, including broadband, is growing year on year in steel mills in Poland. Technological advances are boosting the efficiency in industries. Technology of the Fourth Industrial Revolution is allowing working in ever-closer harmony with different processes of steel and metal production, transforming the way steel is made. Zeman (2017) points out that the steel industry is now halfway between Steelwork 3.0 and Steelwork 4.0. The strengths of the mills of the future are: "deep" automation, digitisation, virtualisation, simulation, processing of data in real time, machine communication and artificial intelligence. Peters (2017) said that "Currently, mills are at the beginning of a long-term evolution with steelwork 3.0 to steelwork 4.0". Progress to Steelwork 4.0 has been halted by the COVID-19 crisis. The year 2020 has been called the COVID-19 year. In 2020, the Polish industry sharply reduced its demand for steel (Gajdzik and Wolniak 2021). However, compared to 2009, the year in which the Polish steel sector was affected by the financial crisis, the decrease in steel production was smaller (Gajdzik and Wolniak 2021). At the end of 2020 (November–December), steel production in Poland increased compared to the previous year (Gajdzik 2021). The COVID-19 crisis and the downturn in the European steel market caused by the surplus of steel production (supply exceeding demand), as well as rising environmental costs (CO<sup>2</sup> emission reduction policy), are dampening investments by Polish steel mills. However, the strategic (long-term) direction of change—steel Industry 4.0—has been continued (fraunhofer.de 2018): the COVID-19

crisis has reinforced the steel mills' belief that the digitisation and automation of steel production will enable them to operate through periods of face-to-face shortages and job cuts. Steel producers in Poland have been implementing digital and technological innovations for several years. Examples of activities include mobile inspections, integrated information and computer systems (SAP), remote measurement and data collection systems, computerised equipment control, 3D printing, and 3D visualisation. The varieties of applied Industry 4.0 technologies create nine pillars (Erboz 2017; Burrell 2019), and digitalisation (Kagermann 2015) enables steel mills to realise several pilot programs (start-ups) and segment the application and implementation of new techniques in the steel industry (Gajdzik et al. 2021). As well as converting traditional steel mills into highly automated "smart" plants, digitalisation enables the different parts of the manufacturing process to interact and perform at their full potential. The share of companies that systematically introduced innovative or improved products or new or improved processes reached 50% of the total number of companies in the Polish steel (metal) industry (Figure 9).

**Figure 9.** New and improved products or new and improved processes in the metal industry in Poland in the period 2010 to 2019. Source: Author's compilation based on data from Statistics Poland (2020).

#### **6. Discussion**

Global industry and that in Europe are changing dynamically all the time. In Poland, we are dealing with the transformation of industry. These changes in

industry are accompanied by progressive automation and digitalisation. The steel industry in Europe and Poland plays a major role in GDP and employment. In Poland, steel industry account for about 3.5% of GDP and employ over 20,000 people. Steel production is interrelated with other market sectors. Consumers of steel include the automotive industry, construction, engineering, transport and other sectors. For every person employed in steel plants, there are four persons employed in other sectors. Annually, the Polish steel industry produces more than nine million tonnes of steel, and its capacity (production capacity) is even higher. Nowadays, digitalisation and automation are essential elements to be taken into account in business decisions. In the Polish steel market, there are strong foreign capital groups which invest in the development of steel mills. The main trend of digitalisation in metallurgy concerns the management and optimisation of production through real-time data analysis. The second trend is maintenance using data, predicting and preventing machine failures and downtime. A distinctive feature of metallurgy is the optimisation of furnace parameters, taking into account the type of material used. In Poland, just over 50% of steel is produced using BF+ BOF technology, and almost 50% is produced using EAF technology. Digitalisation used in steel melting technology optimises processes, improves steel quality and increases work safety. In Poland, significant challenges remain with the control of working time, and the introduction of digital logbooks with tasks for maintenance. An employee receives a task and reports its completion via the system, which can assess the status of work in real time and plan further activities. These are not revolutionary innovations, but they may significantly change the work environment in steel mills. Digitisation of steel production can be seen as the consistent application of new technologies to meet steelmakers' requirements for quality, flexibility and productivity (Herzog et al. 2017). Digitisation is not only a matter of purchasing new equipment, but of developing human resources. Major resources invested in the purchase of equipment, and automation, must go hand in hand with proper communication with employees and a training system in order for their potential to be fully exploited. Competencies are charisma, relationship building, curiosity about the world, openness to change, emotional intelligence, inspiring others, kindness, sense of responsibility, quality orientation, and digital agility. Machines take over repetitive activities, so that work loses its routine character, and the tasks of workers progress to problem-solving, designing, communicating and interpreting information (Romero et al. 2016; Ruppert et al. 2018). Digitalisation in Industry 4.0 creates new challenges for leaders. Leaders 4.0 need to be more flexible and open to working with employees (Oosthuizen 2017). The staff in steel mills in Poland need to be rejuvenated. There is a generation gap in large

steel mills in Poland—there are more employees aged over 45 than young people (Gajdzik and Szymszal 2015).

The future of digitalisation in steel mills will primarily be sustainable production. Important environmental aspects of steel mills are reduced energy consumption (renewable electricity) and the reduction in CO<sup>2</sup> emissions (e.g., capturing CO<sup>2</sup> from BF and converting it into hot reducing gas). Sustainability is strongly linked to Industry 4.0, especially in the context of the green economy. Investments are being made in research and development that will, in future, enable steel mills not to use fossil fuels, but to use hydrogen instead of coke, for example. Decarbonised steel production on a mass scale is a challenge for the steel industry. New steel production processes will create new areas for digitisation in steel mills.

#### **7. Conclusions**

Research has shown that technological investments and the use of ICT, R&D, and improved products and processes foster innovation in the Polish steel industry. However, these are fragmented studies, limited to statistical summaries. There has been no analysis simultaneously covering all the issues of innovativeness of the Polish steel industry in order to answer the question about the readiness of steel mills in Poland for Industry 4.0. The three periods of analysis used in this paper show the transformation of the steel industry. There were state-owned steel plants in a centrally managed economy; now, their owners are capital investors, and plants realise their business in markets. Steel mills in Poland, through many years of investment, have become able to set the course for development as steel mills 4.0. In line with the aim of the analysis and on the basis of statistical data, a conclusion has been drawn that steel mills in Poland should build an environment for Industry 4.0.

The application of digital technology in Industry 4.0 is very broad. The baseline stage is the digitisation of production. The next steps are the construction of a digital environment for the consumer and supplier. Additionally, the final solution is a digital ecosystem with interfaces for suppliers, partners and customers; the product will be embedded in an ecosystem for co-creation and additional new value capture. The entry of digitalisation into the new technology environment of Industry 4.0 requires investments. The existing technologies give way to new ones, which are promoted in the Fourth Industrial Revolution.

**Funding:** This research received no external funding.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**


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