Business Environment Changes

As the social environment continues to change at a dramatic pace, Aichi Steel needs to address a series of new challenges, including CASE technologies and carbon neutrality. In addition to analyzing risks and opportunities throughout society, we turn the spotlight onto carbon neutrality in this report as a particularly fast-changing topic and introduce related initiatives and long-term strategies of our company.

Environmental
Analysis
Changes in the global environment
Category Global warming
Biodiversity
Risks and
Opportunities
Response to carbon neutrality
  • Increasing burden of energy costs
  • Increasing burden associated with developing innovative technologies and utilizing renewable energy
  • Increasing trust in companies working to achieve carbon neutrality
  • Increasing demand for eco-products
  • Improving competitiveness of technologies through development of innovative technologies
Measures (Current) Aichi Environmental Action Plan (renewed every five years)
Development and adoption of technologies to reduce CO2 emissions

  • Development and in-plant trials of heat storage system able to recover exhaust heat from plants (2019)
  • Exhaust heat recovery system able to convert exhaust heat from electric furnaces into steam energy and use it (2020)
Environmental preservation activities
  • Local and social contributions, including development of Nakashinden green spaces and maintenance of biodiversity (from 2013)
Environmental
Analysis
Changes in existing market environments
Category Social infrastructure lifespan
Iron and steel demand trends
Risks and
Opportunities
Rebuilding of social infrastructure
Growth of overseas manufacturers and structural reform of iron and steel companies
Measures (Current) Development of materials and products that can help with updating of social infrastructure
Improved competitiveness of integrated forging with steel making processes
Environmental
Analysis
Arrival of the smart society
Category CASE (automobile structural changes, autonomous driving)
Digital transformation
Risks and
Opportunities
Expansion of the EV market (expansion of demand for materials and components for BEVs)
Reduction in use of specialty steels due to electrification of vehicles
Expansion of markets for new technologies and materials
Measures (Current) Development of materials and components for BEVs and FCEVs
Expansion of business into new fields
Improvement of productivity through digital transformation
Environmental
Analysis
Changes in social environment
Category Aging and diversity
Safety and health
Spread of new infectious diseases
Risks and
Opportunities
Dwindling workforce due to declining birthrates
Driving workstyle reform
Impacts of pandemic on business
Measures (Current) Enhancement of diversity
Improvement of work environments
Health promotion activities
Building of flexible production systems and promotion of diverse workstyles

Working to achieve carbon neutrality

The Japanese government’s Carbon Neutral by 2050 initiative*, launched in 2021, will have an enormously significant operational impact on manufacturers using electric furnaces like Aichi Steel, a heavy user of electric energy. This includes increases in the cost of energy and expenses associated with developing completely new technologies. Rather than wavering between whether or not to adopt this initiative, we accepted carbon neutrality as a necessary challenge and focused on what we needed to do to reach the target. We are now working hard to achieve carbon neutrality.

* The Japanese government first launched the Carbon Neutral by 2050 initiative in 2020, and revised its CO2 reduction target for 2030 upward to 46% in 2021.

New initiatives in progress: Establishment and operation of the Task Force for Promoting Carbon Neutrality

Within the Environmental Working Group, chaired by President Fujioka, we have been working on initiatives such as building a low-carbon society, building a resource-recycling society, and preventing environment abnormalities. To enhance these activities, we have reorganized and have commenced activities under three pillars. We have also designated two of our seven plants in Japan as “carbon neutral model plants” where we are taking the lead and implementing two initiatives: (1) Utilization of solar power to achieve in-house power generation at Seki Plant, and (2) Promotion of CO2 reduction through use of renewable energy at Kariya Plant.

Organizational structure and roles

interview
Carbon Neutrality through Perseverance and Innovation


Naohiro Yasunaga
Safety & Environmental Officer
Director and Managing Executive Officer

Aichi Steel is a resource-recycling company, using steel scrap from automobile and infrastructure dismantling as our main raw material in manufacturing. The Aichi Environmental Action Plan sets out plans and targets for reducing CO2 emissions and addressing environmental issues in local communities. In addition to adopting new technologies for improving heat efficiency and recovering exhaust heat, we have continued activities to achieve harmony with nature under the plan, including installation of LED lighting and other efforts to conserve energy, and creation of biotopes from Nakashinden green spaces. One important guideline for promoting ESG management under Vision 2030 is “contribution to a sustainable global environment,” and I am proud of the way our company has surely and steadily implemented such initiatives over many years.

Last year, the government launched its Carbon Neutral by 2050 initiative, which represents a huge challenge for us because our existing initiatives and pace of implementation alone will not be enough. To reach this target, we need a massive change of policy that does not just concern us but includes the establishment of significant guidelines and measures by the government, the cooperation of energy, transport and all other industries, and the development of innovative technologies. We perceive this situation as offering new business opportunities rather than risks. We feel that it is important to utilize the know-how built up over many years of improvement activities in developing innovative technologies and new products that anticipate future global needs.

Over the years since joining Aichi Steel, I have acquired most of my experience in the hot rolling mill at Chita Plant and in Production Engineering. I have worked as Plant Manager of Chita Plant, General Manager of Production Engineering Headquarters, and Hagane Company President. As an operator of electric furnaces and other heating furnaces that use large amounts of electric power and fuels, Aichi Steel is a heavy user of energy. Therefore, in working toward carbon neutrality, the increase in energy costs will be an unavoidable challenge for us.

In the past, we faced many changes in the social environment that were out of our control, from oil shocks and appreciation of the yen to the global financial crisis and the current COVID-19 pandemic. At each of these times, we have worked together to confront the issue, grown stronger as a company, and overcome the difficulties. Going forward, we will continue turning difficulties into opportunities by developing innovative technologies that demonstrate our leadership in the steel industry, developing eco-products for the automotive industry, using solar power and other renewable energies, reusing CO2 (methanation, etc.), and using hydrogen and ammonia. By driving these innovative initiatives, we will contribute toward realizing a green society.

Driving appropriate, timely and efficient initiatives through the Task Force for Promoting Carbon Neutrality

After establishing the Task Force for Promoting Carbon Neutrality, led by the president with myself as general leader, we commenced operations from June. Each subcommittee has a leader and support officer assigned to promote specific topics in a timely manner through speedy and reliable business decisions.

The CN Planning Subcommittee has an important role in determining overall directions with an added focus on the business environment. With dramatic changes already occurring in the short time since the government launched this initiative, it is important that we gather accurate and up-to-date information to set up the most appropriate response quickly. With the necessity of also moving ahead with a shared understanding of the targets, this subcommittee is gathering information from a wide range of sources, not just steel companies. In addition to individual efforts, use of renewable energy is essential, so it is also developing collaborative structures with energy companies.

Through this task force, we will start by working to reduce CO2 emissions by 35% by 2030 (compared to 2013 levels) while also investigating how to achieve carbon neutrality even earlier than 2050.

Important long-term perspectives

This initiative will not produce results immediately. Rather, it will be a long battle that we will persevere with in order to realize carbon neutrality by 2050 at the latest. This is why we have recruited many young people in their 20s and 30s as members of the task force, while building experience in ways to drive these initiatives and developing talented people who will ensure efforts continue until we reach carbon neutrality. I understand that my role is to create the roadmap and foundations to reach that goal, and then pass the reins to the younger generation as future leaders. I will strive to ensure Aichi Steel survives well into the future.