Our strategy for climate-related risks and opportunities
~TCFD scenario analysis~
Given the international community’s commitment to achieving long-term goals of the Paris Agreement, Nippon Steel signed the statement of support for the Task Force on Climate-related Financial Disclosures (TCFD) in May 2019, considering the climate change as one of priorities that the planet is facing today. Based on the recommendations, we are committed to information disclosure on the climate change impact to our business activities.
Scenario analysis
For each transition factor and physical factor, we have identified risks and opportunities that may have a significant impact on our business in the areas of upstream procurement, direct operations, and downstream demand for products and services. We have then considered strategies for each scenario.
In conducting the scenario analysis, we have used the scenarios of the International Energy Agency (IEA) as a base, and evaluated medium- to long-term risks and opportunities up to 2050, by referring to the IEA’s 1.5°C scenario (NZE2050) and the below 2°C scenario (B2DS) in transitional aspects and the 4°C scenario (NPS) in the aspects of physical impacts.
Reference scenario

Scenario | Factors (risks and opportunities) |
Events
(expectations and concerns of stakeholders) |
▶ | Impact to Nippon Steel (opportunities in■, risks in■) |
Nippon Steel’s strategy (including future responses) |
---|---|---|---|---|---|
1.5℃/2℃ scenario |
Transition factor 1 Advance in electric vehicles (EVs) |
World EV sales: 65 million units, 60% market share in 2030 (vs. 6.6 million units, 8.6% market share in 2021)* |
Opportunities in demand growth for our steel products
■Increase in the global total number of cars and resultant increase in steel demand despite a decline in the share of steel demand for cars equipped with internal combustion engines due to the growth of EVs’ share of the new car market ■Increase in demand for high-performance steel products — our area of strengths, such as electrical steel sheets for EVs |
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Transition factor 2 Shift to other lightweight materials, prompted by tighter fuel efficiency regulations, etc. (multi materials) |
Shift to other lightweight materials, prompted by tighter fuel efficiency regulations, etc. |
Opportunities in demand growth for high-strength steel and capturing of demand for other materials
■Some possibility of switching to other lightweight materials but little prospect for significant progress since steel excels in environmental evaluation from the LCA perspective, including the production stage and material recycling, and automakers increasingly emphasize the evaluation from the LCA perspective ■Increase in demand for high-tensile steel, carbon fiber-reinforced plastic (CFRP), titanium, etc. |
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Transition factor 3 Shift to low-carbon steel (steel that generates low CO2 emissions in production) |
Accelerating shift to low-carbon steel due to change in customers’ demand |
Opportunities in demand growth for low-carbon steel
■Some shift to EAF steel with low CO2 emissions in production ■Continued increase in demand for BF steel due to insufficient increase in EAF steel to satisfy growing worldwide demand, caused by the limited supply of scrap |
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Higher needs for decarbonization in steelmaking process |
Needs for a fundamental review of the steelmaking process aimed for decarbonization
■Potential to gain a great competitive advantage if our technological development and investments advance ahead of global peers ■Increase in investment burden and operating cost for the introduction of breakthrough technologies |
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*Source for EV-related data: the NZE 2050 Scenario of the IEA Global Electric Vehicle Outlook 2022. EVs include battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHVs).
1.5℃/2℃ scenario |
Transition factor 4 Higher needs for energyefficient products and technology |
Eco-friendly technology solution to boost demand | ▶ |
Opportunities in demand growth for eco-friendly technology
■Increased demand for products that realize energy savings in the processing by customers ■Increased demand for products that contribute to energy savings in use of end products ■Increase in profits through the provision of the Group’s technology solutions that enable energy saving in steelmaking process |
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Transition factor 5 Higher needs for products and solutions associated with a society based on renewable energy and hydrogen |
Ratio of renewable energy in world power generation: 88% in 2050 (vs. 28% in 2020) World production of hydrogen: 490 mn tons in 2050 (vs. 90 mn tons in 2020)* |
Opportunities in demand growth for products of our Group
■Profit growth by provision of the Group’s products and solutions that support a renewable-energy-oriented society ■Profit growth by provision of the Group’s products and solutions that support a hydrogen-oriented society |
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Transition factor 6 Increase in cost caused by adoption of carbon pricing (CP) |
Incremental introduction of carbon pricing (CP) measures |
Increasing burdens on our cost due to CP introduction
■The GX Promotion Act states that the introduction of CP will help companies secure the funds and time required to work on technology development and capital investment aimed at decarbonization. While the impact of CP is not so significant for the time being, the burden on our costs will increase due to the CP system design cost and the movement of passing the burden of CP on to electricity charges, etc. we pay. |
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4℃ scenario |
Physical factor 1 Abnormal weather to suspend raw material suppliers’ operation |
Difficulty in operation, caused by a natural disaster | ▶ |
Limited impact by taking measures for risks
■Limited assumed risk in securing stable procurement of raw materials by taking the following measures: |
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Physical factor 2 Abnormal weather to suspend operation and shipment |
Difficulty in procuring raw materials, caused by abnormal weather |
Limited impact by taking appropriate measures
■Adoption of BCP measures. Limited risks in production disruption caused by natural disaster. Excessively abnormal weather may result in suspension of operation, etc. |
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Physical factor 3 Heightened needs for solutions for ‘national resilience’ against natural disasters |
Natural disaster caused by abnormal weather |
Demand growth of steel for national land resilience
■Profit growth by providing products and solutions for national resilience against earthquakes, tsunamis, heavy rain, typhoons, etc. |
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*Source for data on renewable energy and hydrogen: the NZE 2050 Scenario of the IEA World Energy Outlook 2021.