For some time now, we have been in dialogue with the major Japanese steelmaker, Nippon Steel, as part of our focus on reducing the climate emissions intensity of the top emitters in our portfolios. This engagement continued during the second quarter, when in June we decided to escalate our engagement, through an ongoing collaboration with a larger investor group.
Following the collaborative engagement, we supported and voted in favour of three proposed climate-related shareholder resolutions at Nippon Steel’s Annual General Meeting (AGM). The proposals were filed following engagement with the company by a group of institutional investors collectively representing US$ 4.988 trillion of assets under management. All three proposals were supported by Amundi, Nordea Asset Management and Storebrand Asset Management.
The resolutions asked for Nippon Steel to set and disclose short and medium-term greenhouse gas (GHG) emissions reduction targets aligned to the goals of the Paris Agreement for scope 1, 2 and 3 emissions, along with disclosure of planned capex for decarbonisation investments. The resolutions also asked for remuneration to be linked to the company’s GHG emissions reduction targets and improved disclosure of climate-related lobbying activities.
The immediate outcome of these actions was that the resolutions received solid backing of between one third and one fifth of the shareholders at the annual meeting, including delivering the largest ever vote in support of a climate lobbying resolution in Japan. This visible support underlined to the management of Nippon Steel that there is a clear and growing demand by shareholders for the company to implement a more ambitious, cohesive and transparent climate strategy.
This new escalation step aligns with our broader escalation strategy of more vigorously exercising shareholder voting rights when it has the potential to help move engagements forward.
During the third quarter we plan to review the company’s response to the demonstration of shareholder concern and will decide how to continue our engagement efforts.
Results of climate-related proposals at Nippon Steel AGM 2024
- 27.98% of shareholders voted in support of a proposal filed by Legal & General Investment Management (LGIM) and the Australasian Centre for Corporate Responsibility (ACCR) asking for improved disclosure of climate-related lobbying activities.
- 23.01% of shareholders voted in support of a proposal filed by Corporate Action Japan (CAJ) and ACCR asking for remuneration to be linked to the company’s GHG emissions reduction targets.
- 21.48% voted in support of a proposal filed by CAJ and ACCR asking NSC to set and disclose short and medium-term greenhouse gas (GHG) emissions reduction targets aligned to the goals of the Paris Agreement for scope 1, 2 and 3 emissions, along with disclosure of planned capex for decarbonisation investments.