Information disclosure according to recommendations of TCFD
Status of climate changes and actions of the steel industry
- Since 2015 when the Paris Agreement that pledged to advance greenhouse gas emission reduction across the world was adopted, institutions in the international community have been required to seek ways to enable sustainable economic and social growth, while restraining impact on the environment.
- Steel is broadly used in our society an indispensable material element for social infrastructure and durable consumer goods, such as road, railway, buildings, automobiles, and home electric appliances. This is because steel has outstanding features required in many aspects as a basic material, such as abundance as a resource, cost advantages, diverse features, low environmental impact in the manufacturing stage, and endless capability for recycling into all kinds of durable products, in addition to having ideal features for building of infrastructure.
- Medium- to long-term growth in global steel demand is projected, largely influenced by population growth and economic growth in emerging countries, according to the Long-Term Vision for Climate Change Mitigation published by the Japan Iron and Steel Federation in 2018. Since scrap alone cannot meet all steel demand, pig iron production in the blast furnace route is expected to increase (from 1.22 billion tons in 2015 to 1.40 billion tons in 2050).
- As companies are increasingly required to respond to climate changes and to disclose related information, investors and other stakeholders are increasingly interested in the steel industry’s response to risks, such as (1) potential significant reduction in CO2 emissions; (2) changing trends of steel users, including the automobile sector (i.e., increase in electric vehicles, shift to lightweight materials); and (3) adoption of carbon pricing that leads to an increase in operating cost.
- Upon identifying our potential risks and opportunities driven by climate change and considering their significance to our current business strategies, we made scenario analysis for a long-term span to 2050, while referring to the two scenarios (the below 2°C warming scenario and the 4°C warming scenario1) of the International Energy Agency (IEA), so as to utilize them for devising our future business strategies.
- In addition, we have formulated a new climate change countermeasure vision with the aim of achieving “carbon neutral in 2050” consistent with the 1.5°C warming scenario, and have decided to tackle development of breakthrough technologies aimed at the realization of carbon neutrality as a top management challenge.
1: The below 2°C warming scenario is a case wherein much-needed measures will be implemented to keep global average temperature increase below 2°C (1.75°C) compared to pre-Industrial Revolution times.
The 4°C warming scenario is a case that global average temperature will increase by 4 degrees, without taking any economic or additional measures against climate change.
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2: Source for EV-related data: IEA ETP2017 B2DS
EVs only refer to battery electric vehicles (BEVs) with no internal combustion engine (ICE). ICEVs include plug-in hybrid vehicles (PHVs).
3: The ratio of the use of the EAF route is calculated from the estimated crude steel production in the JISF’s paper “A challenge towards zero-carbon steel.”