SteelWatch’s Nippon Steel Corporate Climate Assessment 2025 (1) shows that despite the company having many opportunities globally to pursue near-zero emissions iron and steelmaking, its leadership is stuck in an outdated coal-based production mentality that is unfit for the global company they want to build.

Nippon Steel currently consumes approximately 25 million tonnes of coal annually, and has investments in coal mines with a total annual production capacity of 69 million tonnes. Its recent acquisition of a 20% interest in the Blackwater coal mine adds an additional 10 million tonnes of annual supply capacity, which gives Nippon Steel a comparable coal footprint to pure coal companies, such as BHP Mitsubishi Alliance with its 60 million annual tonnes.

Nippon Steel’s existing 2030 decarbonisation target (-30%) was already significantly less than Japan’s national one (-46%) when it was set in 2021, and the national target has now been increased to a 60% cut in GHG emissions by 2035, rising to 73% by 2040 compared with 2013 levels. The company’s flagship Super COURSE50 technology is only expected to be able to reach 50% reductions in the 2040s at the earliest. This leaves the company falling well short of its climate responsibilities, and indicates that it intends to continue coal use indefinitely.

“With its focus on technology to only partially reduce emissions at coal-based production facilities, its increasingly large investments in Australian coal mines, and its promise to prolong blast furnace production at U. S. Steel plants during its acquisition bid, Nippon Steel is looking more and more like a coal company that also makes steel,” said Roger Smith, Asia Lead at SteelWatch. “Nippon Steel’s assurances that it is committed to decarbonisation will ring hollow until it aligns its climate targets with the 1.5C limit and announces transformative plans for a complete phase out of coal-based production. There is tremendous potential to replace coal by investing in green iron supply chains in regions with abundant renewable energy, such as Australia and Canada.”

Right now Nippon Steel is attempting to satisfy growing demand for green steel with accounting tricks, self-certifying coal-based steel as “green” (2). It has ignored shareholder calls for greater action on climate change (3), and is overdue on an update to its climate plans. More stringent interim targets and greater implementation of low-emissions technologies in the 2030s will be necessary to keep it in line with investor expectations and global competitors. (4)

Notes:

1. SteelWatch’s 2025 Corporate Climate Assessment of Nippon Steel
   steelwatch.org/reports/nscca2025/
2. Nippon Steel’s approach to low-emissions steel certification is “mass balance,” a method of allocating carbon reductions from production to products manufactured through high-emissions processes, labeling them as “green steel”. This risks delaying a genuine transition by devaluing steel actually produced using decarbonised processes and underscores the need for greater transparency and traceability in product-level emissions accounting.
   steelwatch.org/commentary/steelwatch-comment-on-proposed-revisions-to-japans-act-on-promoting-green-procurement/
3. At Nippon Steel’s 100th annual general meeting in June 2024, its shareholders voted for the first time on three resolutions demanding a strengthening of the company’s climate strategy and policies. The following Proposals 1 and 2 were co-filed by the Australasian Centre for Corporate Responsibility (ACCR) and the Corporate Action Japan (CAJ), while the Proposal 3 was co-filed by one of Europe’s largest asset managers, Legal & General Investment Management (LGIM) and ACCR. The three proposals achieved the following results:
   1. Proposal 1: More ambitious emissions reduction targets – 21.48% support
      Nippon Steel to set and disclose short and medium-term greenhouse gas (GHG) emissions reduction targets aligned to the goals of the Paris Agreement for scope 1, 2, and 3 emissions; along with disclosure of planned capex for decarbonisation investments
   2. Proposal 2: Executive remuneration linked to emissions reductions – 23.01% support
      Link executive compensation to the achievement of the company’s GHG emissions reduction targets
   3. Proposal 3: Improve climate-related lobbying disclosure – 27.98% support
      Disclose climate-related policy positions and lobbying activities, including direct lobbying and industry association memberships, and review of these for alignment with the Company’s goal of carbon neutrality by 2050.

Nippon Steel’s Board of Directors expressed opposition to the shareholder proposals, maintaining the stance that the company’s current efforts are adequate.

4. SteelWatch Explainer: Why green iron trade will catalyse steel industry decarbonisation steelwatch.org/steelwatch-explainers/steelwatch-explainer-why-green-iron-trade-will-catalyse-steel-industry-decarbonisation/

This item was originally posted on SteelWatch's website here.