Nippon Steel’s Sustainability Materiality and KPIs

Concerning initiatives in sustainability materiality, Nippon Steel steadily promotes their execution and follow-up by checking the Key Performance Indicators (KPI) to assess outcome, and strives to contribute to sustainable social development, as well as maintenance and improvement of our corporate value.

Materiality KPIs and status of major initiatives

1. Safety, environment, and disaster prevention

（1）Safety and health

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Target and KPI Main Initiatives and Achievements in 2022
  • Accident frequency rate of 0.10 or less
  • Zero fatal accident
  • Promotion of thorough adherence to the six company-wide compliance requirements and promotion of greater machine safety, in order to eliminate serious accidents and similar accidents
  • Prevention and risk reduction of accidents, based on safety risk evaluation
  • Acquisition of occupational safety and health management system (ISO45001) and establishment of internal audit system
  • Accident frequency rate: 0.11
  • Number of fatal accidents: 1
（2）Environment

1) Promotion of climate change measures

  • Promotion of the Carbon Neutral Vision 2050

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    Target and KPI Main Initiatives and Achievements in FY2022
    • Target in 2030: 30% reduction in CO2 emissions
      (compared to 2013)
    • Vision for 2050: Carbon neutral
    • Launched a new comprehensive brand, NSCarbolexTM, to offer “high-performance products and solutions that contribute to reducing CO2 emissions across society” in the global market.
    • [Reduction with hydrogen in blast furnaces (BFs)] Decided to introduce facilities to demonstrate hydrogen-rich gas injection technology at the No. 2 blast furnace in the East Nippon Works Kimitsu Area, in preparation for the demonstration tests scheduled to start in January 2026.
    • [High-grade steel production in large size electric arc furnace (EAFs)] Started the commercial operation of a new electric arc furnace in the Setouchi Works Hirohata Area. Started full-scale studies on the shift from the blast furnace steelmaking process to the electric arc furnace steelmaking process, with the Kyushu Works Yawata Area and the Setouchi Works Hirohata Area as candidate sites.
    • [CCUS] Participated in three advanced CCS projects led by the Japan Organization for Metals and Energy Security (JOGMEC).
  • Contribution by “Three Ecos”
    • Implementation of “Eco Process”

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      Target and KPI Main Initiatives and Achievements in FY2022
      • Maintaining high-level effective use of energy
      • Effective use of by-product gas (coke oven gas, blast furnace gas etc.) and waste heat
      • Use of byproduct gas: 100%
      • Use of waste heat in steam generation: 76%
      • In-house generated energy use in in-house power generation: 72%
      • Promotion of adopting advanced energy-saving technology
      • Adoption of high-efficiency power generation equipment and oxygen plant; regeneration burner in reheating furnace
      • Investment cost for energy-saving: ¥37.4 bn
    • Enhancement of “Eco Products”

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      Target and KPI Main Initiatives and Achievements in FY2022
      • Supply of high-performance steel products to help reduce CO2 emissions through use of their end products
      • Decided to make an additional investment to increase the production capacity of high-grade non-oriented electrical steel sheets at the Setouchi Works Hanshin Area (Sakai) and the Kyushu Works Yawata Area (90 billion yen, a cumulative total of 213 billion yen).
      • Expansion of products that acquire the EcoLeaf environmental labels (Increased by 12 from the previous year to a total of 47)
    • Contribute with “Eco Solutions”

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      Target and KPI Main Initiatives and Achievements in FY2022 (including some results in FY2020)
      • Transfer and dissemination of the world-leading energy-saving technology to help CO2 emission reduction globally
      • Growing cumulative CDQ delivery record by Nippon Steel Engineering in the Group
      • 137 CDQ cumulative units
        (contributing to 28.73 mn t-CO2 reduction, FY2021)

2) Contribution to creation of a circular economy

  • Realization of zero emissions within the company

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Target and KPI Main Initiatives and Achievements in FY2022
  • Reduction in final disposal amount: 263 thousand tons or less (FY2025 target)
  • Promotion of recycling of by-products (slag, dust, sludge, etc.) in and out of the Company
  • Final waste disposal: 271 thousand tons
  • Realization of recycling of waste generated in society

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  • Establishment of a waste plastics recycling system to expand its collection volume
  • Aggressive promotion of recycling treatment, according to the Chemical Recycling Act
  • Packaging/container plastic waste treatment: 200 thousand tons (equivalent to 30% of Japan’s total plastic waste)

3) Conservation of biodiversity and nature positive

  • Contribution to the conservation of biodiversity and nature positive
Target and KPI Main Initiatives and Achievements in FY2022
  • Promoted activities aimed at achieving the 30by30 biodiversity target
  • Participated in the “30by30 Alliance” for biodiversity
  • Promoted the Creation of Hometown Forests at steelworks
  • Conducted activities of the Creation of Sea Forests
  • Participated in March 2023
  • Greenery space: 850 ha
  • Creation of Sea Forests at 44 locations in total
    (+6 areas from the previous year)

4) Promotion of environmental risk management

  • Air environment preservation
Target and KPI Main Initiatives and Achievements in FY2022
  • Maintaining low-level emissions of NOx and SOx
  • Installment of equipment that reduces SOx and NOx emissions; shifting to low-sulfur fuel; adoption of low NOx regenerating burners
  • SOx: 13 mn Nm3
  • NOx: 23 mn Nm3
  • Maintaining of lower discharge levels than voluntary targets in chemical substances
  • Emission of VOC (Volatile Organic Compounds): 1,106 tons/year (down 30% vs. FY2000)
  • Emission of benzene: 172 tons/year
    (voluntary target, along with the government target)
  • Continual efforts based on the voluntary reduction plan
  • VOC: 396 tons/year
  • Benzene: 80 tons/year
  • Water environment preservation

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  • Recycling of water; high-level stable use of recycled water
  • Water treatment, recycling and reuse of freshwater used by the Company
  • Use of recycled water: app. 90%
(3) Disaster prevention
  • Elimination of disaster risks and group-wide sharing of effective measures
Target and KPI Main Initiatives and Achievements in 2022
  • Zero serious disaster-related accident
  • Promoted activities to prevent recurrence and prevention of disaster-related accidents based on risk assessment
  • Promoted initial response training aimed at minimizing damage when a risk occurs
  • Implemented various monitoring (audits) as a survey of disaster prevention activities
    Evaluation of disaster prevention activities through third-party monitoring, hearings from head office management, and self-monitoring by steelworks disaster prevention managers
  • Serious disaster-related accidents: 0

2.Quality

(1) Quality control and guarantee
Target and KPI Main Initiatives and Achievements in FY2022
  • Systemization and automation aimed at more credibility in testing and inspection
  • Promoting a shift from manual data input to automatic data input as a measure to prevent input errors and falsification of pre-shipment judgment data
(2) Research and development and intellectual property investment/utilization
Target and KPI Main Initiatives and Achievements in FY2022
  • Promotion of strategic research and development aimed at sustainable business growth
  • Respect for intellectual property and enhancement of its strategic protection and utilization
  • Actively promoted research and development related to priority issues such as product sophistication, process efficiency improvement, and the development of carbon-neutral-oriented innovative processes
  • Promoted utilizing intellectual property aimed at strengthening patent applications related to priority issues, response to infringement of patent rights, and technical tie-ups
  • R&D expenses: ¥70.5 billion (consolidated)
  • The number of patents held: approximately 30,000
    (14,000 in Japan and 16,000 overseas)
(3) Solution that result in customer satisfaction
Target and KPI Main Initiatives and Achievements in FY2022
  • Number of awards from customers, government, and institutions
  • Received the awards and prizes including the 69th Okochi Prize, the 55th Ichimura Industrial Prize in Industry for Distinguished Achievement, the FY2023 Commendation for Science and Technology by the Minister of Education, Culture, Sports, Science and Technology, and the 9th Monodzukuri Nippon Grand Award
  • Number of awards from customers, government, and institutions: 10

3.Production

(1) Stable production and supply
Target and KPI Main Initiatives and Achievements in FY2022
  • Initiatives for more stable production and supply (hardware and software)
  • Relined the No. 3 blast furnace at the Nagoya Works and innovated the steel scrap and pig iron melting process at the Setouchi Works Hirohata Area (the start of commercial operation of the electric arc furnace)
  • Standardization of veterans’ operational skills and extended use of experts
  • Use of IoT and AI for operational support, improved efficiency of facility inspection and operation monitoring, and reinforcement of predictive monitoring

4.Human resources, and diversity & inclusion

(1) Respect for human rights
Target and KPI Main Initiatives and Achievements in FY2022

“Respect for Human Rights”
(2) Diversity & inclusion
Target and KPI Main Initiatives and Achievements in FY2022
  • The number of female employees in management positions: at least 2 times, (vs. 36 in FY2020), and 3 times as target in 2025; at least 4 times, and 7 times as target by 2030
  • The ratio of paid holidays taken: 75% or higher
  • Wellness management aimed at maximizing people's ability up to the age of 65, and support to enhance mental and physical health

“Diversity & Inclusion”
  • Number of women in managerial positions: 65
    (as of April 2023)
  • The ratio of paid holidays taken: 82.9%
    (FY2022)
(3) Human resource development
Target and KPI Main Initiatives and Achievements in FY2022
  • Promotion of measures to develop human resources

“Human Resources Development
  • Hours of training and education: 800 thousand hours/year
    (28 hours/person, year)

5. Together with local communities

(1) Environmental preservation/creation activities in communities
Target and KPI Main Initiatives and Achievements in FY2022
  • Green space development to contribute to the local environment
  • Funding for green space development and maintenance
  • Expenses for green space development and maintenance: ¥1.3bn
(2) Activities mainly in the support of education, sports, and arts
Target and KPI Main Initiatives and Achievements in FY2022
  • Ongoing promotion of hosting plant visits
  • Proactively accepting plant visits by shareholders, investors, and junior high/elementary school students
  • Number of plant visitors: app. 130,000
    (FY2019 results; almost no implementation in FY2020, FY2021 and FY2022 due to the COVID-19 pandemic)
  • Continual execution of corporate philanthropy in the support of music via Nippon Steel Arts Foundation
  • Support of music activities via presentation of Nippon Steel Music Awards and operation of the Kioi Hall

6. Corporate value enhancement and profit distribution

(1) Securing of profit and enhancement of corporate value
Target and KPI Main Initiatives and Achievements in FY2022
  • ROS of 10% (FY2025 plan target)
  • ROE of 10% (FY2025 plan target)

Please see the 11-Year Financial Performance section of Nippon Steel’s(6MB)
  • ROS of 11.5%
  • ROE of 18.1%
(2) Profit distribution
Target and KPI Main Initiatives and Achievements in FY2021

1) Salary and wages payment to employees

  • Bonus payment amount
  • Revised amount of salary

Please see the following: Fact Book: Wages and Bonuses

“Financial Strategy”(6MB)

“11-Year Financial Performance section of Nippon Steel’s”(6MB)
  • Base bonus amount: ¥2.35 mn
  • Revised amount of salary: ¥2,000

2) Appropriate tax payment

  • Tax payment (consol.)
  • Tax payment (consol.): ¥214.4 bn

3) Dividend payment to shareholders

  • Dividend payment

Note: Target consolidated payout ratio: around 30% (FY2025 management plan)
  • Dividend per share: ¥180/year

Thorough implementation of compliance

Adhering to laws and regulations as a base of all activities

Please see the Corporate Governance section of Nippon Steel’s

“Corporate Governance”(6MB)

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