21 May, 2024​:  A group of shareholders, Legal & General Investment Management (LGIM), the Australasian Centre for Corporate Responsibility (ACCR) and Corporate Action Japan (CAJ), have today announced the co-filing of a set of three shareholder proposals asking Nippon Steel Corporation to protect the long-term interests of shareholders by improving its decarbonisation strategy.

• Proposal one, filed by CAJ and ACCR, asks 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.
• Proposal two, filed by CAJ and ACCR, asks for remuneration to be linked to company GHG emissions reduction targets.
• Proposal three, filed by LGIM and ACCR, asks for improved disclosure of climate-related lobbying activities.

The filing follows engagement with the company by a group of institutional investors collectively representing US$4.988 trillion of assets under management.

All three proposals are supported by the co-engagement group, which includes Amundi, Nordea Asset Management and Storebrand Asset Management.

The group of shareholders believe that by implementing these proposals, Nippon Steel can move towards becoming a regional leader on steel decarbonisation in Japan and the broader Asian steel market, strengthening its position globally.

Proposals one and two reflect concerns from long-term investors that Nippon’s lack of Paris-aligned targets, along with a decarbonisation strategy that relies heavily on unproven technologies, presents a range of material risks to shareholders, including the risk of stranded assets.

Proposal three has been filed following an intensive engagement period with the Company focusing on climate-related lobbying.

[N.B.]    CAJ is not a co-filer for Proposal three, as our engagement on the topic has been limited compared to the filers, and we deemed it insufficient for us to join as a co-filer. However, in the interest of enhancing long-term corporate value, we remain committed to supporting all three proposals.

Commenting on the filing, Aina Fukuda, Head of Japan Investment Stewardship at Legal & General Investment Management (LGIM) stated:

“It is clear that there is a growing need for transformative policy developments aimed at accelerating the transition to a net-zero economy. Therefore, transparency around climate policy engagement has become increasingly important for LGIM’s engagements with companies worldwide.

“Japan, too, is at a pivotal juncture in its climate and energy policies. We now call on Nippon Steel to lead by example, to enhance accountability and transparency in its efforts to influence these policies as they take shape.

“We also believe that Nippon Steel stands to benefit from public policies aligned with international climate goals. Policies supporting the shift towards low-emissions steelmaking can, in our view, strengthen the company’s global competitiveness and resilience amidst evolving market dynamics.”

Lewis Ashworth, Climate Specialist at LGIM, said:

“Ambitious climate policy and responsible corporate climate lobbying are essential to an orderly transition to net-zero emissions. We believe that disclosure of climate- and decarbonisation-related policy positions and lobbying activities globally and their alignment to a company’s goals are required by good governance and essential to long-term value creation.

“LGIM’s co-filing on this resolution is because it is our view that the current level of Nippon Steel Corporation’s disclosures in these regards means shareholders cannot properly assess if the company’s lobbying activities are sufficiently coordinated and optimised to ensure the global policy environment supports its decarbonisation goals, nor that they  are in line with the goals of the Paris Agreement.”

“Nippon Steel has been too slow to embrace the opportunities built into the green steel transformation. The company needs to do more to provide confidence to shareholders that it can remain competitive in the future.

Brynn O’Brien, Executive Director at ACCR, said:

“Nippon Steel is looking to flex its muscle on the global stage with its likely acquisition of US Steel.  A company with these ambitions needs to have a credible decarbonisation strategy, and right now this is undermined by its over-reliance on CCUS.

“Investors can see that Nippon Steel has an opportunity. As a local leader that competes at scale abroad, Nippon Steel can show investors and policymakers it’s ready and willing to find region-specific solutions that are globally competitive and responsive to the needs of customers as the demand for green steel grows.”

Yasunori Takeuchi, CEO / Representative Director at CAJ, stated:  

“Nippon Steel has identified climate change as one of management’s priority challenges and is investing in ‘super innovative technologies’ to achieve its 2030 target and carbon neutrality by 2050.  However, the shareholder group is concerned that its current transition plan and capital allocation will not suffice, and may have a negative impact on its corporate value in the coming decades. The proposals seek greater clarity in its decarbonization efforts to increase investor confidence in the transition and strengthen climate governance to ensure its business resilience towards a 1.5°C scenario.”  

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About each shareholder

Legal & General Investment Management (LGIM) is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.2 trillion* (JPY 208 tn, $1.5tn, €1.3tn, CHF 1.2tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.  *Data as at 31 December 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong. Assets under management include securities and derivatives positions. 

Australasian Centre for Corporate Responsibility (ACCR) is a not-for-profit, philanthropically-funded shareholder advocacy and research organisation headquartered in Australia that engages with listed companies and investors globally, enabling and facilitating active stewardship.

Corporate Action Japan (CAJ) is a shareholder advocacy organisation, which collaborates with institutional investors, international philanthropic foundations and other stakeholders, leveraging the power of investment to drive climate action in the private sector.