Nippon Steel’s ESG Materiality and KPIs

Concerning initiatives in ESG 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 2021
  • Accident frequency rate of 0.10 or less
  • Zero fatal accident
  • Prevention and risk reduction of accidents, based on safety risk evaluation
  • Promotion of disaster prevention aimed at prevention of repeated disasters (thorough adherence to the six company-wide compliance requirements and promotion of greater machine safety)
  • Acquisition of ISO45001 for management systems of occupational health and safety (OH&S) to enhance safety level
  • Accident frequency rate: 0.10
  • Number of fatal accidents: 2
(2)Environment

1) Promotion of climate control measures

  • Promotion of the Carbon Neutral Vision 2050 (CO2 emission reduction)

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    Target and KPI Main Initiatives and Achievements in FY2021
    • Target in 2030: 30% reduction vs. 2013
    • Vision for 2050: Carbon neutral
    • Selection of the “hydrogen utilization in iron and steelmaking processes” project as a Green Innovation Fund project
    • Decision to establish a small test furnace for the manufacture of high-grade steel in an electric arc furnace and direct reduction of 100% hydrogen
    • The project, which was established in April 2021, was reorganized into a permanent organization in April 2022 and was expanded to the scale of a team of about 90 people.
  • Contribution by “Three Ecos”
    • Implementation of “Eco Process”

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      Target and KPI Main Initiatives and Achievements in FY2021
      • Maintaining high-level effective use of energy
      • Effective use of byproduct gas (coke oven gas, blast furnace gas etc.) and waste heat
      • Use of byproduct gas: 100%
      • Use of waste heat in steam generation: 67%
      • In-house generated energy use in in-house power generation: 75%
      • 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: ¥8.7 bn
    • Enhancement of “Eco Products”

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      Target and KPI Main Initiatives and Achievements in FY2021
      • Supply of high-performance steel products to help reduce CO2 emissions through use of their end products
      • Investment in capacity and quality improvement measures to meet the growing demand for electrical steel sheets and higher-grade products
      • Decision to install a next-generation hot rolling mill
      • Expansion of products that acquire EcoLeaf environmental labels
      • Yawata Area of Kyushu Works and Hirohata Area of Setouchi Works: Start of operation in 1H of 2024 (¥123 billion in investment)
      • Nagoya Works: Start of operation in 1H of 2026
      • Acquisition of EcoLeaf environmental labels for 35 products (more than 80% of our products), up from 15
    • Contribute with “Eco Solutions”

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      Target and KPI Main Initiatives and Achievements in FY2021 (including some results in FY2020)
      • Transfer and dissemination of the world-leading energysaving technology to help CO2 emission reduction globally
      • Growing cumulative CDQ delivery record by Nippon Steel Engineering in the group
      • 128 CDQ cumulative units (contributing to 25.81 mn tons-CO2 reduction, FY2020)

2) Contribution to creation of a circular economy

  • Realization of zero emissions within the company
  • Recycling of waste generated in society
Target and KPI Main Initiatives and Achievements in FY2021
  • Reduction in final disposal amount: 263,000 tons (FY2025 target)
  • Promotion of recycling of byproducts (slag, dust, sludge, etc.) in and out of the company
  • Final waste disposal: 307 thousand tons
  • 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: 220 thousand tons (equivalent to 30% of Japan’s total plastic waste)

3) Promotion of environmental risk management

  • Air environment preservation
Target and KPI Main Initiatives and Achievements in FY2021
  • 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: 13mn Nm3
  • NOx: 25mn Nm3
  • Maintaining of lower discharge levels than voluntary targets in chemical substances VOC (volatile organic compounds): 1,106 tons/year (down 30% vs. FY2000)
    Benzene: 172 tons/year (voluntary target, along with the government target)
  • Continual efforts based on the voluntary reduction plan
  • VOC: 545 tons/year
  • Benzene: 95 tons/year
  • Water environment preservation
Target and KPI Main Initiatives and Achievements in FY2021
  • 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
Target and KPI Major Initiatives and Achievements in FY2020 (including some results in FY2019)

    1) Elimination of disaster risks and group-wide sharing of effective measures

  • Zero serious disaster-related accident
  • Prevention of recurrence via corporate-wide implementation of measures against risks emerged from the accidents
  • Risk assessment to detect new disaster risks; execution of measures from hard/soft aspects to reduce risk and control residual risk
  • Self-monitoring (auditing) by those in charge of disaster prevention in steelworks; and management by the head office management through interviews
  • Serious disaster-related accidents: 0

2.Quality

(1) Quality control and guarantee
Target and KPI Main Initiatives and Achievements in FY2021
  • Systemization and automation aimed at more credibility in testing and inspection
  • Progress in automatic input of inspection results from testing/analytical devices and measurement devices
(2) R&D and intellectual property management
Target and KPI Main Initiatives and Achievements in FY2021
  • Strategic R&D, aimed at sustainable growth
  • Protection and use of intellectual property
  • Increasing applications and acquisition of rights depending on the importance of invention based on business strategy and business plan
  • Integrated management of the patents held and products and technologies to respond to patent infringement and accelerate the effective use into technology alliances
  • R&D expenses: ¥66.4 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 FY2021
  • Number of awards from customers, government, and institutions
  • Awards received include the 68th Okochi Prize, the 54th “Ichimura Prize in Industry for Distinguished Achievement“ and “Ichimura Global Environmental Prize in Industry for Distinguished Achievement”, the 2022 MEXT Minister’s Award, and the 2022 National Commendation for Invention.
  • Number of awards from customers, government, and institutions: 9

3.Production

(1) Stable production and supply
Target and KPI Main Initiatives and Achievements in FY2021
  • Initiatives for more stable production and supply (hardware and software)
  • Start of refurbishment of Nagoya No. 3 coke and relining of Nagoya No. 3 blast furnace
  • Standardization of veterans’ operational skills and extended use of experts
  • Use of IoT and AI for operational support, efficiency improvement 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 FY2021
(2) Diversity & inclusion
Target and KPI Major Initiatives and Achievements in FY2020 (including some results in FY2019)
  • 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
  • Number of women in managerial positions: 55 (as of April 2022)
  • Ratio of women in hiring: 25% of office staff; 10% of operators; 15% in overall (FY2020–2022 average)
    The ratio of paid holidays taken: 77.8% (FY2021)
(3) Human resource development
Target and KPI Main Initiatives and Achievements in FY2021
  • Promotion of measures to develop human resources
  • Hours of training and education: 540 thousand hours/year (19 hours/person, year)

5. Together with local communities

(1) Environmental preservation/creation activities in communities
Target and KPI Main Initiatives and Achievements in FY2021
  • Green space development to contribute to the local environment
  • Tree planting activities by new employees in steelworks
  • Funding for green space development and maintenance
  • Greenery space: 840ha
  • Expenses for green space development and maintenance: ¥1.2bn
(2) Activities mainly in the support of education, sports, and arts
Target and KPI Main Initiatives and Achievements in FY2021 (including some results in FY2019)
  • 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 and FY2021 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 FY2021
  • ROS of 10% (FY2025 plan target)
  • ROE of 10% (FY2025 plan target)
  • ROS of 13.8%
  • ROE of 20.5%
(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

2) Appropriate tax payment

  • Tax payment (consol.)

3) Dividend payment to shareholders

  • Dividend payment
  • Note: Target consolidated payout ratio: around 30% (FY2025 management plan)

Please see the following: Fact Book: Wages and Bonuses

  • Base bonus amount: ¥2.37 mn
  • Revised amount of salary: ¥3,000
  • Tax payment (consol.): ¥86.0 bn
  • Dividend per share: ¥160/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

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