Nippon Steel’s US Steel acquisition raises decarbonization cost concerns
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Nippon Steel could risk increasing its decarbonization costs by acquiring US Steel. An activist shareholder group has urged the company to consider the takeover’s impact on its climate goals.
In 2023, Nippon Steel, the world’s fourth-largest steelmaker, announced a $15 billion takeover bid for US Steel. While US Steel supported the bid, the move has faced opposition from a strong labour union and the White House.
Australasian Centre for Corporate Responsibility (ACCR), holding less than 1% of Nippon Steel’s shares, has submitted shareholder proposals in collaboration with Corporate Action Japan (CAJ) and Legal & General Investment Management (LGIM). They are urging Nippon Steel to enhance its decarbonization strategy.
Brynn O’Brien, executive director of the ACCR, said, “The potential addition of US Steel’s 11 blast furnaces to Nippon Steel’s operations will almost certainly increase the company’s cost of decarbonization.”
Additionally, the Not-for-profit organization CAJ wants more information on the company’s carbon emission targets “so that investors, including ourselves, can make appropriate assessments of risks, including the total cost of decarbonization as a whole group,” Yasunori Takeuchi, CAJ’s chief executive, said in an e-mail to Reuters.
ACCR also stated, “Investors will vote at Nippon Steel Corporation’s annual general meeting on a series of shareholder proposals urging the company to improve on steel decarbonization and climate lobbying disclosures.”
Read more: Japan’s Nippon Life Insurance announces new transition finance guidelines
Shareholder activism on climate change has increased in Japan over the past few years, yet it hasn’t always resulted in policy changes at companies with existing emissions reduction plans.
In 2021, before the US Steel bid, Nippon Steel projected that decarbonization could cost up to $34.8 billion in capital expenditure, including R&D, by 2050, with some costs expected to be offset by state support.
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