Shareholder proposals to Nippon Steel Corporation on climate targets, executive compensation and climate lobbying

The Australasian Centre for Corporate Responsibility (ACCR) has co-filed three shareholder proposals to Nippon Steel Corporation on climate targets and disclosures, linking executive compensation to GHG emissions reduction targets and enhancing climate lobbying disclosures.

This page contains the proposals and supporting statements.

Proposal 1

Partial amendment to the Articles of Incorporation

Details of the proposal

The following clause shall be added to the Articles of Incorporation:

1. The Company shall set and disclose short- and medium-term GHG emissions reductions targets aligned to the goals of the Paris Agreement for scope 1, 2 and 3 emissions for all operations and affiliates.
2. The Company shall prepare and disclose transition plans that include, planned capital allocation for decarbonisation investment over the forward 3 years, along with the estimated emissions reduction impact of each investment, to achieve the short and medium-term GHG emissions reductions targets.
3. The Company shall report, in its annual reporting, on its progress against such targets and transition plans.

Reason for the proposal

Long-term investors in the Company see its corporate value depending upon a credible decarbonisation strategy and short-, medium- and long-term GHG emissions reduction targets aligned with the goals of the Paris Agreement.  We welcome the commitment by the Company to the recommendations of the TCFD which recommends disclosure of scope 1, 2 and 3 emissions and the related risks for the consolidated accounting group, associates, joint ventures, and unconsolidated subsidiaries not included in the consolidated accounting group.

While we welcome the Company’s intention to achieve carbon neutrality by 2050, the Company’s emissions reduction targets towards 2030 are not aligned to the goals of the Paris Agreement and the Company’s current decarbonisation strategy relies heavily on technologies that have not been proven to deliver emissions reductions at scale. Not having Paris aligned targets together with the uncertainty of its technology investment strategy presents a range of material risks to shareholders, including the risk of stranded assets.

Setting Paris-aligned targets, and disclosing credible business plans to achieve them, would best manage these risks and protect corporate value. Disclosure of the Company’s forward capital expenditure and alignment with emissions reduction targets would assist shareholders assessment of the Company’s plans.

Proposal 2

Partial amendment to the Articles of Incorporation

Details of the proposal

The following clause shall be added to the Articles of Incorporation:

The Company shall set and disclose, in its annual reporting, details of how the Company’s compensation system incentivises and rewards progress for achieving the company’s GHG emissions reduction targets.

Reason for the proposal

Long-term institutional investors in the Company consider a direct linkage between remuneration and achievement of the Company’s GHG emissions reduction targets, to be in the Company’s interests, as an important mechanism to incentivise executive performance towards  achievement of the Company’s strategy and goals and protect corporate value.

Proposal 3

Partial amendment to the Articles of Incorporation

Details of the proposal

The following clause shall be added to the Articles of Incorporation:

The Company shall disclose annually, climate-related and decarbonisation-related policy positions and lobbying activities globally, including its own direct lobbying and industry association memberships, and review these for alignment with the Company’s goal of carbon neutrality by 2050 and explain the actions it will take if these activities are determined to be misaligned.

Reason for the proposal

To manage strategy and risks to protect company value, it is in the Company’s best interests for its climate-and decarbonisation-related policy positions and direct and indirect lobbying activities to be aligned with the Company’s goal of carbon neutrality by 2050 and the achievement of its GHG emissions reduction targets.

Shareholders believe that disclosure of climate-related and decarbonisation-related policy positions and lobbying activities globally and their alignment to the Company’s goals are required by good governance and essential to long-term value creation.

The current level of the Company’s disclosures in these regards means shareholders cannot properly assess if the Company’s lobbying activities are sufficiently coordinated and optimised to ensure the global policy environment supports its decarbonisation goals and are in line with the goals of the Paris Agreement.