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.

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. While we are advancing initiatives for the Sustainable Development Goals (SDGs) adopted by the United Nations, we recognize climate change issues as a priority problem that may threaten survival of the human race. We are proactively undertaking diverse environmental issues concerning various areas of concern, from local communities to the entire planet, including climate change issues, creation of a circular economy, and promotion of the environmental risk management. We are thereby contributing to the realization of a sustainable society.

The ongoing Carbon Neutral Vision 2050 efforts have two aspects.

The first aspect is our action to contribute widely to the realization of a carbon neutral society through providing users with our advanced high-performance steel products and solutions in Japan and overseas. This is also a great business opportunity for us. As an upfront investment in this effort, we have decided to make investment in improving the capacity and quality of electrical steel sheets, and in building a next-generation hot-rolling mill at the Nagoya Works. We are steadily progressing in making these investments.

The second aspect is a challenge of developing new production process aimed at radically reducing CO₂ emissions in the manufacturing process. This requires a challenging advanced technical development, that requires us to act in hitherto unexplored areas. This is an enormous challenge in the history of the steel industry. 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. Further, we aim to become the first to provide carbon neutral steel to ourcustomers and thereby contribute to their reduction of CO₂ emissions.

Our targets are to reduce CO₂ emissions by 30% compared to 2013 in 2030 and achieve carbon neutrality in 2050. We have already launched earnest development efforts toward decarbonizing the steelmaking process. As an example, in December 2021 our project to develop technologies required for achieving these targets has been adopted as a part of the “hydrogen utilization in iron and steelmaking processes” project of the government’s Green Innovation Fund.

We are determined to boldly take up the challenge toward the realization of carbon neutrality through collaboration by the public and private sectors in various areas, including the government’s support for R&D and equipment installation, the establishment of an infrastructure to supply hydrogen, the realization of a low-cost, abundant carbon-free power sources, and the establishment of a system for society as a whole to bear the enormous costs associated with these.

We also believe that we need to help build a circular economy, from the viewpoint of further growing the economy while building a sustainable society. Steel is a material which can be easily taken out of a present use and endlessly recycled without causing deterioration in quality. Steel can be described as a perfect embodiment of a circular economy. Nippon Steel is also actively engaged in use of by-products generated in steelmaking for achieving zero emission. We also recycle 100% of used and discarded plastic containers and packaging generated in society and collected by us. In addition, in accordance with the Law for Promoting the Recycling of Plastic Resources enforced in April of this year, we are considering to expand the recycling volume of plastic waste recycling. We are committed to contributing to the realization of a circular economy by means of tireless technological innovations.

Concerning maintenance and improvement of the living environment in our communities, what we focus on is environmental risk management, including prevention of accidents and undesirable conditions or events. This is our priority issue for continuing business, along with safety and disaster prevention. In addition to compliance with laws and regulations, we strictly adhere to the ordinances and standards of municipalities, and give due consideration to the conditions of each base of operations, thoroughly taking measures from both hard and soft aspects to reduce environmental burden.

With regard to biodiversity preservation, which we recognize as indispensable as part of the base of our business activities, we have long been involved in the “Creation of a Hometown Forest” 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 will continue to use our management resources and accelerate various initiatives. We formally expressed our support to Keidanren’s Declaration of Biodiversity and Action Policy and are promoting its activities in accordance with our policy of action based on this. As initiatives to establish a society co-existing with nature are both regional and global issues, we intend to incorporate them in our business activities and to execute environmentally integrated management, with the aim of realizing a sustainable society.

We declare in our Corporate Philosophy to pursue world-leading technologies and manufacturing capabilities, and contribute to society by providing excellent products and services. This resonates with the concept of the United Nations’ Sustainable Development Goals (SDGs). We are eager to continue to prevail as a company that helps solve diverse social issues through its business activities.

In this report, we are presenting our engagement with various stakeholders as well as our response to social issues. In addition to the environment issues, specific themes include respect for human rights, diversity and inclusion, safety, safety and disaster prevention, quality, supply chain management, and coexistence with the community and society of which we are a part.

In particular, the themes we presented in detail include the business activities that respect diverse values and human rights issues, and the activities related to diversity and inclusion from the perspective to becoming a company that allows its workforce to demonstrate their full capabilities and be empowered with pride and fulfillment. 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 key challenges (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.