Responding to Climate Change-Governance,Management of Climate-related Risks,Target and Results-

The Nippon Steel Group recognizes that climate change is an important issue that affects the survival of humankind, and that it may have a serious impact on the business environment and business performance. In order to conduct business in a sustained manner, we are working to reduce the impact of climate change through initiatives to reduce CO₂ emissions throughout the supply chain.

Governance concerning climate change

Nippon Steel recognizes climate change as one of its important managerial issues. As this issue may have a significant impact on our business environment and management, we have established the Green Transformation Promotion Committee, the level of which is equivalent to the Board of Directors. The Committee sets strategies, risk management policies, annual budgets, business plans, and performance targets related to climate-related issues, as well as deliberating and supervising the progress of them.

Among the matters discussed, decided, and reported by the Committees, significant matters are resolved and reported at the Board of Directors.

Examples of climate-related issues reported or resolved at the Board of Directors

Formulation of the Nippon Steel Carbon Neutral Vision 2050
Expressing support for the purpose of the TCFD Final Report and disclosing information in accordance with the TCFD recommendations
Green Transformation R&D and issues concerning actual implementation
Procurement issues concerning green transformation
Issues concerning green steel
Response to the Green Innovation Fund
Support for the GX League basic concept, participation in the GX League, etc.

Management of climate-related risks

Recognizing external climate-related risks and opportunities, we identify risks and opportunities that could have a significant impact on our business in terms of impact on upstream procurement, direct operations, and downstream provision of products and services for each transition factor and physical factor. Specifically, from the perspectives of markets, policies, laws and regulations, technology, and reputation, we identify transition risks, physical risks, and opportunities that could affect upstream procurement, direct operations, and downstream provision of products and services. We then identify significant risks based on the likelihood of occurrence and magnitude of impact of those risks and opportunities.

The identified risks and opportunities are reported to the Board of Directors level committees as stated on the left, and significant risks are reported to the Board of Directors. These risks are thereby integrated into the Company’s overall risk management.

The Group’s CO₂ emissions reduction target

In addition to its independent “Nippon Steel Carbon Neutral Vision 2050,” we are tackling climate change measures as a member of the Nippon Steel Group at major domestic and international upstream facilities with high CO₂ emissions, based on medium- to long-term CO₂ emissions reduction targets.

As we expand our business in Japan and overseas in the future, we will continually and flexibly assess our climate change measures in accordance with the policy outlined below, while monitoring international trends, as well as developments in laws, regulations, and disclosure standards in other countries.

Meanwhile, U. S. Steel, which we merged with in June 2025, announced in 2019 a plan to reduce its Scope 1 and 2 GHG emission intensity by 20% compared to 2018 levels by 2030. The company also announced in 2021 another plan to achieve net-zero emissions by 2050.

Governance policy on CO₂ emissions reduction targets at our global upstream facilities

Advance carbon neutrality at domestic and overseas upstream facilities by leveraging Nippon Steel’s resources and expertise gained thorough domestic R&D and operational activities

Domestic consolidation (parent company + subsidiaries)

Targets are set for the group, including those of the parent company and consolidated subsidiaries
Each company formulates its emission reduction plans to meet the group target

Overseas subsidiaries

Their targets are set for each country and company, taking into account different conditions imposed by each country and region, and varying national reduction targets and transition strategies

Equity method affiliates (domestic and overseas)

Each company’s target setting and carbon neutrality initiatives are supported in collaboration with the JV partner

Nippon Steel Group’s energy consumption and energy-derived CO₂ emissions

Nippon Steel has been working on energy conservation from diverse points: efficient using of energy generated in the steelmaking process (i.e., power generation from recovered by-product gas and waste heat); making operational improvements in each process; renovating older coke ovens and other equipment; introducing high-efficiency power generation facilities and oxygen plants; and employing reheating furnaces with the regenerative system.

In FY2024, despite a slight decline in production, we advanced energy-saving measures, resulting in a modest reduction in both energy consumption and energy-derived CO₂ emissions.

Our energy-derived CO₂ emissions accounted for 95% of our GHG emissions.

Boundary of data collection: Nippon Steel^{*2, *3}, EAF subsidiaries (Osaka Steel, Sanyo Special Steel, Nippon Steel Stainless Steel, Oji Steel, Tokai Special Steel, Nippon Steel Structural Shapes Corporation, Tokyo Kohtetsu, Ovako, Sanyo Special Steel Manufacturing India, and Standard Steel), and three Sanso Center companies^*4
The data collection period used is each company’s accounting period. As Ovako has changed its fiscal year-end, Ovako’s fiscal 2021 results cover a period from January 1, 2021 to March 31, 2022 (15 months).

Calculation method: Calculation for the Company and its domestic subsidiaries is based on the methodology of the Carbon Neutrality Action Plan.
Overseas subsidiaries follow local regulations or guidelines for calculation.

Conversion factor: The Company and its domestic subsidiaries use the “Table of heat generation and carbon emission coefficient by energy source” (revised March 14, 2025) of the Agency for Natural Resources and Energy, METI.
Overseas subsidiaries use relevant emission factors according to local regulations or guidelines.

*1Preliminary figure: The amount of CO₂ per unit of purchased electricity from each of the general power companies in Japan in fiscal 2024 is assumed to be the same amount as in fiscal 2023.
*2Excluding energy consumption and CO₂ emissions associated with the IPP operation by the steelworks.
*3The amounts of energy consumption required for and CO₂ emissions from production of coke purchased by Nippon Steel are included in the aggregate.
*4Concerning the three Sanso Center companies, the amounts of energy used and CO₂ emitted for production of oxygen purchased by Nippon Steel Group are included in the aggregate.

Breakdown of Nippon Steel’s GHG emissions

<Unit: K t-CO₂e, [%]>
		FY2020	FY2021	FY2022	FY2023	FY2024
GHG Total		77,153	86,873	78,125	79,764	79,013
	Energy-derived CO₂	73,950 ［96］	83,241 ［96］	74,829 ［96］	76,225 ［96］	75,349 ［95］
	Non-energy-derived CO₂	2,977	3,383	3,079	3,280	3,389
	CH₄	97	108	99	104	114
	N₂O	129	140	118	154	139

CO₂ emissions in the value chain

CO₂ emissions originated from energy source and generated in Nippon Steel’s manufacturing process (Scope 1 and Scope 2) as well as CO₂ emissions in the value chain (Scope 3), which are calculated by using the Green Value Chain Platform of the Ministry of the Environment and other methods are as follows.

Scope 1 and Scope 2 emissions

Emission intensity per tonne of crude steel produced
	CO₂ emissions <Unit: K t-CO₂, [t-CO₂/t]>					Calculation method
	FY2020	FY2021	FY2022	FY2023	FY2024	Calculation method
Scope 1 Direct emissions from owned sources associated with use of fuel	63,170^*3	71,311^*3	63,403^*3	64,020^*3	63,672^*1	Based on the Carbon Neutrality Action Plan.
Scope 2 Indirect emissions from the generation of purchased energy	11,035	12,458^*3	11,912^*3	12,425^*3	11,423^*1
Total	74,205^*3 ［1.97］	83,768^*3 ［1.88］	75,315^*3 ［1.92］	76,445^*3 ［1.93］	75,095^*1 ［1.96］

Boundary of data collection

Nippon Steel*2 and EAF subsidiaries (Osaka Steel, Sanyo Special Steel, Nippon Steel Stainless Steel, Oji Steel, Tokai Special Steel, Tokyo Kohtetsu, Nippon Steel Structural Shapes Corporation, Ovako, Sanyo Special Steel Manufacturing India, and Standard Steel). The data collection period used is each company’s accounting period. As Ovako has changed its fiscal year-end, Ovako’s fiscal 2021 results cover a period from January 1, 2021 to March 31, 2022 (15 months).

*1Preliminary figure: The amount of CO₂ per unit of purchased electricity from each of the general power companies in Japan in fiscal 2024 is assumed to be the same amount as in fiscal 2023.
*2Excluding CO₂ emissions associated with the IPP operation by the steelworks.
*3Due to a review of the summary values and changes in coefficients and other factors, the figure for this past year was revised retroactively.
*4This does not include G/GJ steel.

Conversion factor: The Company and its domestic subsidiaries use the “Table of heat generation and carbon emission coefficient by energy source” (revised March 14, 2025) of the Agency for Natural Resources and Energy, METI. Overseas subsidiaries use relevant emission factors according to local regulations or guidelines.

Scope 3

	CO₂ emissions <Unit: K t-CO₂>					Calculation method
	FY2020	FY2021	FY2022	FY2023	FY2024	Calculation method
①Purchased goods and services	14,379	15,994	12,939	11,995	11,413	Calculated for purchased iron ore, coking coal, coke, and oxygen^*4.
②Capital goods	1,632	1,400	1,503	1,571	2,005	[Amount of capital expenditures] X [Emission factor]
③Fuel- and energy-related activities not included in Scope 1 or Scope 2	291	338	293	257	285	[Amount of electric power procured and fuel used] X [Emission factor]
④Upstream transportation and distribution	629	710	638	611	585	[Transportation distance reported in the Energy Saving Law document] X [Emission factor]
⑤Waste generated in operations	4	5	5	5	4	[Amount of waste] X [Emission factor]
⑥Business travel	4	4	4	4	4	[Number of employees] X [Emission factor]
⑦Employee commuting	14	14	13	13	13	[Number of employees] X [Emission factor]
⑮Investments	1,125	1,053	1,193	1,124	1,334	[Emissions by subsidiaries and affiliates that emit GHG of over 10,000 tons] X [Equity stake of each company]

Boundary of data collection

Nippon Steel

*5Iron ore and coal: [Amount purchased of procured iron ore and coal] X [Emission factor]
Coke: [Amount purchased of procured coal at source] X [Emission factor] + [Amount of energy used in production of coke] X [Emission factor by energy source]
Oxygen: [Amount of energy used in production of oxygen] X [Emission factor by energy source]

Source of emission factor: "Emissions unit value database for accounting of greenhouse gas emissions throughout the supply chain (ver. 3.5)" (March 2025, Ministry of the Environment)
"Table of heat generation and carbon emission coefficient by energy source" (revised March 14, 2025) of METI, Agency for Natural Resources and Energy

CO₂ emission reduction by manufacturing Blast furnace cement

By using blast furnace slag for cement production, we are able to reduce the amount of lime and fuel required, and reduce CO₂ emissions per ton of cement by 320 kg (more than 40% reduction compared to ordinary cement).

CO₂ emissions from cement production

	2016	2017	2018	2019	2020	2021	2022	2023
Cement production (1,000 tons)	208	216	218	207	199	186	191	178
Cement production capacity (1,000 tons)	335	355	335	335	335	335	335	335
Clinker production (1,000 tons)	130	136	131	130	125	120	115	113
Clinker production capacity (1,000 tons)	163	142	142	140	140	140	140	140
Clinker / cement ratio	0.63	0.63	0.60	0.63	0.63	0.64	0.60	0.58

	2016	2017	2018	2019	2020	2021	2022	2023
CO₂ emissions(1,000 t-CO₂)	118	122	117	117	110	105	107	103
CO₂ emission per ton of cement(kg-co₂/ton)	567	564	536	563	555	561	561	579

Climate change measures in the resource recycling and biodiversity fields
—Blue carbon

Nippon Steel has promoted scientific analysis on usefulness and safety of use of steel slag — a by-product from the steelmaking process. To improve this technology, we began a basic study on blue carbon (CO₂ absorption and fixation in the marine ecosystem), which is getting more attention as a measure against climate change.

In fiscal 2022, we calculated the CO₂ fixation effect in a seaweed bed development project, on which we have been working over the past nearly 20 years, applying for J-Blue Credit™ certification jointly with the Mashike Fishery Cooperative Association (Mashike, Hokkaido).

J-Blue Credit™ was certified and issued for 49.5 t-CO₂ — the amount of CO₂ absorbed and fixed (blue carbon) over the five years (2018 – 2022).

Further, in fiscal 2023, we submitted applications with joint applicants in Mashike-cho and Tomari-mura in Hokkaido, as well as in Kimitsu City, Chiba Prefecture, and J-Blue Credit™ for 33.3 t-CO₂ were certified and issued as the amount of CO₂ absorbed and fixed.

Also in fiscal 2024, we conducted demonstration tests of seaweed bed development in 32 sea areas nationwide, conducting continuous surveys of the changes in iron concentration in seawater before and after the test, as well as the growth status of seaweed. In addition to the acquisition of these basic data, we are working to advance seaweed bed development technology by providing theoretical support through scientific approaches, such as off-line testing using the “Sea Laboratory” (marine environment simulator) at the Research & Engineering Center of the R&D Laboratories (Futtsu City, Chiba Prefecture) and model analysis that reproduces actual sea conditions.

Adaptation to climate change

In addition to taking mitigation actions against climate change, we take into account the diverse impact of climate change and appropriately prepare for risks, as adaptive initiatives, and at the same time seek to capture business opportunities.

Preparation for risks

There is a risk that operations and shipments may be interrupted due to the flooding of steelworks and other events, including some caused by abnormal weather as a consequence of climate change. To prevent such risks, we are implementing measures against typhoons and heavy rains, measures to prevent crane overturn, installation of levees, reinforcement of embankments and gradients, and measures to prevent wind and flood damage at each steelworks.

Moreover, our steelworks have enhanced facilities to prevent water pollution. These facilities were provided to increase waste water treatment capacity and involved installation of a large storage tank so that water tainted with iron ore powder would not directly be released into the sea even if our steelworks were subjected to localized heavy rain.

In addition, some administration offices are built on a piloti structure, which means there is open space with no walls on the ground level. This makes the buildings less vulnerable to tsunami. This is a part of our efforts to be well prepared for emergencies such as flooding and high waves.

Capturing business opportunities

We have many products that are used for a long time as construction material for embankments and other public infrastructure. They contribute to providing solutions for “national resilience,” such as protecting towns from flooding or high tides caused by heavy rains or typhoons. Adaptation to climate changes also leads to business opportunities for Nippon Steel.

For example, we have developed and provided for actual use various types of products and product utilization technologies in the civil engineering field. They include hat-type sheet piles (contributing to national resilience in a wide range of ways, including measures against liquefaction of river levees, water leakage, and tsunami reaching coastal levee), linear-type steel piles (having a high-tensile strength at the joints, being suitable to cell-type quays, erosion-control dams and water shut-off work, and contributing to measures for sand embankments and against landslide at the time of heavy rain or a typhoon), and a method of preventing subsidence by use of sheet piles.