Nippon Steel’s U.S. Steel acquisition might raise decarbonization costs; activists urge addressing the impact on climate goals.
Nippon Steel offered $15 billion for U.S. Steel; however, the White House and a strong labor union opposed it.
Brynn O’Brien, executive director of the Australasian Centre for Corporate Responsibility (ACCR), says, “The potential addition of U.S. Steel’s 11 blast furnaces to Nippon Steel’s operations will almost certainly increase the cost of decarbonisation for the company,”.
Less than 1% of Nippon Steel’s shares are owned by ACCR. Meanwhile, CAJ and LGIM urged better decarbonization strategy.
In response to ACCR’s concerns, Nippon Steel stated it would share decarbonization technologies with U.S. Steel, including hydrogen injection.
“The combination of the technologies developed by Nippon Steel and U.S. Steel to accelerate efforts to become carbon neutral by 2050,” Nippon Steel said without giving details.
The businesses intend to complete the deal before year’s end.
On June 21, Nippon Steel had their annual general meeting.
Yasunori Takeuchi, CEO of CAJ, stated that the organization needs more details on carbon targets for proper risk assessment.
In the past five years, shareholder activism on climate change has increased in Japan; however, policy changes remain rare.
Nippon Steel plans up to 5.5 trillion yen for decarbonization by 2050, partly funded by government, before U.S. Steel proposal.
“Nippon Steel needs to consider how the acquisition impacts its decarbonisation plans, and transparently communicate this,” said O’Brien.
Nippon Steel pledged $1.4 billion to U.S. Steel plants, aiming to produce advanced, environmentally sustainable steel.
Nippon Steel plans to feed hydrogen into blast furnaces, add electric arc furnaces, and use carbon capture for decarbonization.
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