Contributing to building a society with reduced environmental burden
• 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 (from 1.62 billion tons in 2015 to 2.68 billion tons in 2050), 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. In contrast, as generation of end-of- life scrap increases in proportion to an increase in steel stock, use of scrap will increase in steelmaking (from 0.56 billion tons in 2015 to 1.55 billion tons in 2050). This increase is not enough to satisfy the entire steel demand. It is therefore indispensable to make steel from natural resources. Pig iron production in the blast furnace route is also expected to increase (from 1.22 billion tons in 2015 to 1.40 billion tons in 2050).
• In order to achieve goals of the Paris Agreement, the steel industry is required to significantly reduce CO2 emissions in steelmaking, with an increasing focus on the shift to production by electric furnaces, which have a lower CO2 emission coefficient than blast furnaces. However, as recognized by international and Japanese industrial standards, namely the ISO and the JIS, the environmental impact is essentially the same for steel products made by the blast furnace (BF) route and by the electric arc furnace (EAF) route. This judgment is based on Life Cycle Assessment that incorporates recycling impact. The BF route remains to be indispensable as discussed above and we thus need to establish technology that realizes lower carbon in its use. Moreover, development of ultra-innovative technology that may break through these routes is also desired for realizing the Paris Agreement’s long-term goals.
• In addition to containing CO2 emission in steelmaking, we are also required to respond to customers’ requirements for lightweight, high-strength materials in the automotive area due to tighter environmental regulations and increase in electric vehicles.
• Climate-related risks and opportunities could be significant for many companies’ financial positions and the related disclosure could reduce risks offinancial destabilization. Because of this, in response to the request from the G20, the Financial Stability Board (FSB) established the industry-led TaskForce on Climate-related Financial Disclosures (TCFD or Task Force) to develop climate-related disclosures in December 2015 and the TCFD released itsrecommendations in June 2017.
• 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 non-steel lightweight materials prompted by tightened environmental regulations); and (3) adoption of carbon pricing that leads to an increase in operating cost.
• Given the international community’s commitment to achieving long-term goals of the Paris Agreement, our company 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.
• In order to expand information disclosed as recommended by the TCFD, we analyzed two scenarios (2°C scenario and 4°C scenario*) for a long-term span to 2050 and after. Specifically, we identified our potential risks and opportunities driven by climate change, considered their significance, and organized their impacts and our initiative options related to them.
*The 2°C scenario is a case that much-needed measures will be implemented to keep global average temperature increase below 2°C compared to pre-Industrial Revolution era.
The 4°C scenario is a case that global average temperature will increase by 4 degrees, without taking any economic or additional measures against climate change.
TCFD scenario analysis