ArcelorMittal, the world’s second-largest steel producer, is blocking the necessary move away from coal by developing new blast furnaces, and by extending the life of existing ones. With its Annual General Meeting taking place on April 30th, Reclaim Finance is calling on the company’s shareholders to escalate their climate-related engagement and to oppose the development of coal-related activities in their voting decisions.
ArcelorMittal, among the world’s largest steelmakers, ranks as one of the leading contributors to greenhouse gas emissions globally. As such, several investors have engaged with the company through the Climate Action 100+ initiative. Since 40% of the company is owned by the Mittal family,[1] no climate-related shareholder resolution has ever been filed at the company’s AGM. However, some shareholders are engaging the company through other actions, including bilateral dialogue and private letters. Last year, a group of investors including Nordea Asset Management, Aegon Asset Management, MFS Investment Management and Ruffer LLP sent ArcelorMittal several climate-related requests. [2] Since then, the company has failed to provide a satisfactory response,[3] thus justifying further action from investors as part of a credible escalation process.
A strategy that still relies heavily on coal
Although coal is one of the fossil fuels that emits the most greenhouse gases, ArcelorMittal still plans to use it for its steel production in coming years. The company is indeed continuing to extend the lifetime of its existing blast furnaces and to invest in new coal-fired blast furnaces, for instance in India as part of a joint venture with Nippon Steel.[4]
A recent analysis published by the Australasian Centre for Corporate Responsibility (ACCR) [5] shows that less than half of ArcelorMittal’s decarbonization projects have the potential to produce steel without fossil fuels. [6] These include projects based on carbon capture, utilisation and storage (CCUS) technologies, even though such processes remain unproven at scale.[7]
Beyond the concerns regarding coal-based projects, there are also doubts about the completion of projects based on cleaner technologies, such as green hydrogen, which are located in Europe.[8] In February 2024, ArcelorMittal’s Head of European Operations stated that green hydrogen was too expensive to be used in its European steel mills.[9] This statement is all the more worrying given that the company receives massive subsidies in Europe to develop this technology.[10]
Furthermore, the company’s climate strategy lacks clarity. For example, ArcelorMittal is planning a total investment of $10 billion to achieve its 2030 decarbonization target, but the company fails to explain in detail how this amount will contribute to the implementation of its different decarbonization levers.[11]
Opposing the development of coal-based steel in 2024 strategic routine votes
Given ArcelorMittal’s lack of progress on climate action and its development of coal-related activities, Reclaim Finance is calling on the company’s shareholders to use the 2024 AGM as a key opportunity to escalate their engagement. Investors should continue their current actions by asking written and oral questions about the company’s coal-related projects and its projects related to alternative sustainable technologies. They should also increase pressure on the company by integrating climate in their votes on strategic routine resolutions.
Voting at Annual General Meetings is an important tool for shareholders, as it can influence the company’s strategy and governance and send a strong signal to the board and management. Climate issues are also closely related to the strategic considerations of high-emitting companies, including ArcelorMittal. These issues must therefore be integrated into key resolutions, especially those relating to the re-election of directors, the discharge of the board of directors, and remuneration. Since the board of directors and executive management are responsible for defining and implementing the company’s strategy, they must be held accountable for any climate-wrecking plans based on fossil fuels, and must be sanctioned for this in votes.
Climate action should be the main strategic topic to be discussed at ArcelorMittal’s AGM 2024. It is crucial that investors take climate considerations into account in their voting decisions on strategic resolutions, by opposing the development of metallurgical coal-based activities. Otherwise, they may indirectly contribute to the company’s climate inaction.
