Nippon Steel’s climate plan challenged ahead of AGM
World number four steel producer, Nippon Steel, is failing to meet international standards and falling behind its competitors on climate action, due to its focus on coal-based steelmaking.
According to SteelWatch’s new report, Nippon Steel’s targets and stated plans leave it far off-track for emissions reduction in line with the 1.5C climate scenario. Its emissions reductions in Japan to date are largely by closing blast furnaces rather than shifting to cleaner production methods. Nippon Steel’s ambitions are increasingly global but not all emissions are included in its climate targets.
As a result, Nippon Steel is facing pressure from key stakeholders. Ahead of the Annual General Meeting (AGM) taking place on 21 June, shareholders have issued proposals demanding the company “protect the long-term interests of shareholders by improving its decarbonisation strategy and disclosures on climate lobying.” Three proposals have been co-filed by investor engagement group the Australasian Centre for Corporate Responsibility (ACCR), Corporate Action Japan (CAJ) and one of Europe’s largest asset managers, Legal & General Investment Management (LGIM). They are the first publicly filed shareholder proposals on Nippon Steel’s climate plans since the company announced its carbon neutral roadmap in 2021.
Additionally, Nippon Steel’s acquisition of U.S. Steel is key to its business expansion strategy, but has been criticised from all sides. If Nippon Steel’s acquisition of U.S. Steel is successful, it will have greater responsibility and face greater scrutiny as a major global steelmaker. Prominent community and national-level environmental non-profit organisations in the United States questioned whether Nippon Steel will do enough to address U.S. Steel’s legacy of pollution from its coal-based facilities and ensure the company’s continued competitiveness by investing in green steelmaking technology. These organisations have engaged with the Biden administration requesting that approval of the acquisition be tied to a phase-out of coal and alignment with the climate and industrial policy goals in the US.
How far short are Nippon Steel’s decarbonisation efforts? SteelWatch modelled Nippon Steel’s CO2 emissions (excluding associated EAF mills and overseas assets) between now and 2050 in three different scenarios: “business-as-usual”, “stated policies”, and a SteelWatch proposed “green transition.”The analysis shows that the company’s climate decarbonisation strategy is completely inadequate for it to claim it’s doing its part to stabilise the climate.
Nippon Steel’s decarbonisation plans emphasise ‘COURSE50’ and ‘Super COURSE50,’ but this analysis shows these policies to inject hydrogen into blast furnaces is a false solution that perpetuates coal-based production. Even if it could be implemented the company states Super COURSE50 would only reduce emissions 50% after 2040 leaving the resulting steel far above definitions of near-zero steel.
The steel sector alone accounts for 7% of global GHG emissions and we need to decarbonize it as quickly as possible.
The race to green steel has begun with rival steelmakers, including SSAB, Cleveland Cliffs, H2 Green Steel and POSCO commercialising steelmaking technologies capable of near-zero emissions. These technologies can replace coal-based ironmaking with direct reduction of iron ore using hydrogen produced from renewable energy sources. Nippon Steel’s competitiveness increasingly hinges on its ability to innovate and make decarbonization central to its business strategy. Its shareholders are speaking- will the company leadership listen?
Read the English Report: “Too Little Too Late: Corporate Climate Assessment of Nippon Steel 2024.” SteelWatch. 31 May, 2024.
https://steelwatch.org/reports/too-little-too-late-corporate-climate-assessment-of-nippon-steel-2024/
Japanese Report:
https://steelwatch.org/wp-content/uploads/2024/05/SteelWatch_NipponSteel_MAY2024_Japanese.pdf
