Storebrand Engagement Yields Steel Decarbonisation

    Stockholm (NordSIP) – Given its 7% and 9% share of the direct emissions from the global use of fossil fuels, the decarbonisation of the steel industry represents one of the crucial steps in achieving the 2015 Paris Agreement goals. Getting companies to see the benefits of these efforts is crucial and one of the steps that responsible investors can take via engagement with the sector.

    To that effect, Storebrand, together with Man Group and the Australasian Centre for Corporate Responsibility (ACCR), a research and shareholder advocacy organisation, has been engaging with JFE Holdings, one of Japan’s leading steelmakers,  to encourage the company to improve its climate governance.

    Now, these efforts appear to have yielded encouraging results. On May 23rd, 2022, JFE announced three measures designed to enhance the company’s climate governance. The Japanese company is committing to “an annual consideration of its emissions reduction target, with a focus on exceeding its 30% target”, an annual conversation with shareholders about the alignment of its technology investment with its target and to linking executive remuneration with its target in the company’s medium-term business plan.

    “Decarbonisation of the steel industry is a critical global challenge. We are pleased that JFE recognises the need for strong governance structures, and the need for ongoing revision of targets based on technology advancements and investments, to support company decarbonisation. As shareholders, we are looking forward to a continued and constructive engagement with JFE,” Victoria Liden, Senior Sustainability Analyst at Storebrand Asset Management, said.

    “This outcome demonstrates the strong alignment of company and shareholder interests in respect of JFE’s decarbonisation plans. Remuneration-climate linkage is an increasingly important marker of credibility in company plans, and long term investors can take comfort in JFE’s commitment in this regard. This engagement is testament to the positive outcomes that the collaboration between investors, corporates and civil society can achieve,” Jason Mitchell, Head of Responsible Investment Research at Man Group added.

    “Constructive investor-company engagement is an extremely promising accelerator of decarbonisation around the world, and we commend JFE for their responsive approach to dialogue that has resulted in an outcome designed to protect long term corporate value. We are looking forward to engaging with JFE and other Japanese companies to promote long term value and achieve planetary climate goals,” Brynn O’Brien, Executive Director, ACCR, concluded.

    Image courtesy of JFE Holdings
    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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