I would like to thank our shareholders and all other stakeholders for your understanding and support to the Nippon Steel Group.

In March 2021, we announced a new medium- to long-term management plan, with the aim of continuing to grow to “become the best steelmaker with world-leading capabilities,” that supports Japan’s industrial competitiveness. We have since been undertaking our corporate management accordingly. By including “Nippon Steel Carbon Neutral Vision 2050” within the plan, we have identified our efforts concerning climate change issues as our greatest priority issue. Our basic approach toward realizing a decarbonized society is to win in the development competition with other countries and continue to lead the world’s steel industry. Through these efforts, we are committed to establishing a virtuous cycle of environmental sustainability and corporate growth and improving corporate value.
　　In this Sustainability Report 2023 we are pleased to present to you the current status of promoting the Carbon Neutral Vision 2050 as well as wide-ranging sustainability-related initiatives as we advance toward realizing a sustainable society. Specific themes include the environment, human rights, diversity & inclusion, safety, disaster prevention, and quality.

　　Having positioned environmental matters as priority issues that underlie our corporate management as stated in our Basic Environmental Policy, we have pledged to contribute to the creation of a society oriented toward environmental preservation and with low environmental impact. With the progressing initiatives for achieving the Sustainable Development Goals (SDGs) adopted by the United Nations, we will conduct our operations to proactively contribute to creating sustainable communities by providing integrated solutions to the issues of climate change measures, the creation of a circular economy, and the conservation of biodiversity, including maintaining and improving a favorable living environment.

As for climate change measures, we set forth the Nippon Steel Carbon Neutral Vision 2050, which aims to reduce total CO₂ emissions by 30% by 2030 compared to 2013 levels and to become carbon neutral by 2050. Under the vision, we will support our customers in improving their competitiveness by offering two values: “providing high-performance steel products and solutions that contribute to reducing CO₂ emissions throughout society” and “providing carbon neutral steel through decarbonizing our steelmaking processes.”

　　In addition, we launched a new comprehensive brand, NSCarbolex™, under which we offer through these efforts “high-performance products and solutions that contribute to reducing CO₂ emissions across society.” Reducing carbon in the steel industry is not easy, so it is expected to take a long time to develop decarbonation technologies. Under such a circumstance, we will offer NSCarbolex Neutral products to supply customers with steel products with a reduced carbon footprint early on by allocating the total amount of CO₂ emissions that we have reduced through projects aimed at reforming and improving our manufacturing processes to any given steel product using the mass balance method. Furthermore, we will also offer NSCarbolex Solution high-performance products and solutions that contribute to not only reducing CO₂ emissions in our manufacturing processes but also reducing CO₂ emissions in society.
　　This is an enormous challenge. We find it crucial to solidify our development prospects ahead of others and start actual use of the new manufacturing processes at an early stage. We are taking this dramatic change in the business environment as a great opportunity to reestablish our overwhelming superiority in the world steel industry, and we are determined to actively address it as a top management issue.

Creating a circular economy is an essential issue from the viewpoint of further growing the economy while building a sustainable society. Steel is a material which can be easily sorted and endlessly recycled without causing deterioration in quality. Steel can be described as a perfect embodiment of a circular economy. We are also actively engaged in use of by-products generated in steelmaking for achieving zero emission. We also recycle 100% of used and collected plastic containers and packaging generated in society and collected by us, with Nippon Steel alone processing about 30% of the total volume collected across the country. Furthermore, Vivary™ Unit, a mixture of steel slag (a by-product of steelmaking) and fermented waste wood, contributes to restoring sea desertification, with a CO₂ fixation effect as blue carbon expected. Because Vivary Unit acquired a J-Blue Credit™, it is fair to say this product contributes to creating a circular economy and provides integrated solutions to promote the conservation of biodiversity and climate change measures. We are committed to contributing to the realization of a circular economy by means of tireless technological innovations.

Amid increasing movement toward the 30by30 biodiversity target as has been seen at the G7 Summit in the U.K. in 2021 and in the Kunming-Montreal Global Biodiversity Framework adopted at the Convention on Biological Diversity COP15 in 2022, we are moving toward biodiversity conservation. This past March, in support of these goals for biodiversity conservation, we also participated in the 30by30 Alliance established by the Japanese government. We have long been involved in the “Creation of Hometown Forests” at each steelworks, and “blue carbon” activities designed to create seaweed beds and absorb CO₂ in coastal waters.

We are thus developing initiatives that harmonize nature protection and production activities. We believe we can contribute significantly to Japan’s national efforts by actively promoting various initiatives backed by our management resources. As for creating sustainable communities, we believe environmental risk management, including accident and trouble prevention, must take precedence over anything else from the standpoint of business continuation, just like safety and disaster prevention. Concerning the recent drainage incident in the Kimitsu Area, we take it seriously, implementing finely tuned environmental impact reduction measures from both hardware and software perspectives by reaffirming the significance of the incidence, going back to basics, and understanding the realities at each operational base, including compliance with local ordinances and standards as well as conformity to laws and regulations. As for our response to social issues, we consider it an essential element for our corporate management, including interactions with various stakeholders such as diversity and inclusion and coexistence with communities and society, as well as safety, disaster prevention, quality, and production as outlined in our “Manufacturing Values.” In particular, while promoting business activities that respect varying values and consider human rights issues, we are aggressively working on activities related to diversity and inclusion from the perspective of becoming a company that encourages diverse employees to work with high productivity and demonstrate their full capabilities with pride and a sense of satisfaction. Based on the belief that the development of excellent personnel is a prerequisite for the production of excellent products, we are working on strengthening our manufacturing capability with emphasis on the development of our human assets. In order to live up to our Corporate Philosophy of contributing to the development of society and to be continually trusted by everyone, we are committed to fulfilling our social responsibility.

Sustainability issues are considered as one of our priority management issues, which form part of the base that supports sustainable corporate growth. We have thereby identified priority issues (materiality) of sustainability issues that should be addressed in a focused manner, with due consideration to our corporate principles, values, stakeholders’ expectation, and our growth strategy. We intend to steadily promote its execution and follow-up by checking Key Performance Indicators to assess outcomes of our efforts.
　　We set forth a corporate philosophy, “Nippon Steel Corporation Group will pursue world-leading technologies and manufacturing capabilities, and contribute to society by providing excellent products and services.” We hope to continue to be a company that contributes to realizing a sustainable society through core business activities.