The political climate is unpredictable, and many of Europe’s flagship green steel projects have been delayed. Still, signs of change are appearing across the steel sector — on both the demand and supply sides. Market development driven by sustainability has not ground to a halt; it advances in fits and starts.
At TAH Foundation, we track this transition from the perspective of green steel — and seek to influence it through engagement with buyers, producers, and regulators.
The Role of Automotive Industry
The automotive industry has been a key demand-side driver. Automakers face mounting pressure to cut supply chain emissions, and the higher cost of green steel accounts for only a small fraction of a car’s total price. The Lead the Charge network’s latest ranking of electric vehicle supply chain responsibility, published this spring, shows that the number of completely inactive companies continues to decline — even if improvements were more modest than in the previous year. The ranking covers not only emissions reduction but also broader environmental and human rights issues, from responsible sourcing of raw materials to supply chain transparency.
In recent years, corporate climate targets and voluntary purchase commitments have begun to turn into actual contracts with steelmakers. Companies such as Volvo, BMW, and Mercedes-Benz have signed agreements with producers like Stegra (formerly H2 Green Steel). These deals however, still represent only a small share of the auto sector’s steel demand, leaving significant work ahead.
Steelmakers in the Spotlight
On the production side, developments are also underway. Japan’s largest steelmakers — Nippon Steel and JFE Steel — have long been the focus of sustained investor engagement. Both companies have announced plans to build electric arc furnaces, which emit significantly less carbon than conventional blast furnaces.
For Nippon Steel, commitments announced in May have now begun to materialize into investment decisions. Yet, according to our partners Transition Asia and ACCR, details on renewable energy sourcing and the overall emissions impact remain uncertain. Nippon Steel itself estimates annual avoided emissions of 3.7 Mt CO₂ — nearly half of Finland’s yearly road transport emissions (9.3 Mt CO₂).
Regulation as a Catalyst for Change
Regulation can also be a driver of change. The EU’s Carbon Border Adjustment Mechanism (CBAM) imposes a carbon price on certain imports, preventing carbon leakage and encouraging cleaner production. Meanwhile, new sustainable procurement rules require companies to ensure that raw materials and products are sourced responsibly and ethically, addressing issues such as labor rights, environmental harm, and supply chain transparency. These measures shape global standards and put pressure on both demand and supply. CBAM, for instance, has already been reported to incentivize Southeast Asian governments to introduce their own carbon tax mechanisms more rapidly. It is crucial that EU environmental regulation remains robust and uncompromised.
The green steel transition is unfolding on many fronts. But how can such a systemic shift be measured?
How We Track Systemic Change
Our monitoring approach draws on the UN Development Programme’s Innovation Sandbox and its guide Innovative M&E from the Sandbox and Beyond. The Sandbox provides a safe space to test new solutions to global challenges in collaboration with diverse partners. The framework emphasizes three steps:
- Define the system — in our case, distilled in our steel strategy, which directs our work on green steel.
- Identify change across the system — together with partners, we track purchase agreements, investment decisions, policy developments, and corporate responsibility practices.
- Assess contribution — we analyze how the work we fund may have helped bring about observed changes.
Impact typically unfolds over the long term — especially in industrial sectors like steel, where investment cycles are lengthy. Since our first grants were awarded in 2021, our timeframe is still short. That is why we also monitor short-term signals — public commitments, purchase agreements, campaign visibility, investment announcements, and regulatory changes. These can offer early indicators of a broader transformation.
How Our Funding Contributes to Change
TAH Foundation supports work that aims to cut steel sector emissions and help establish and grow the market for green steel. We fund a wide range of organizations working at different levels of change. Two key levers in accelerating emissions reductions in steel production are growing demand for green steel and harnessing the power of investors.
Driving Demand
Our partners build demand by engaging directly with companies and by influencing regulatory frameworks.
- The Sunrise Project coordinates the Lead the Charge network, spotlighting the auto sector’s climate impacts and pushing companies toward cleaner supply chains.
- Transport & Environment (T&E) produces analyses on the costs and emissions-reduction potential of green steel, while think tank Institut Mobilités en Transition (IMT) pilots innovations in high-quality recycled steel.
- The European Environmental Bureau (EEB) focuses on EU policy, whose global reach also shapes the auto industry.
- SteelZero mobilizes companies’ voluntary purchase commitments, with members including automakers like Volvo and Polestar.
Investor Pressure on Producers
Investor engagement is a powerful driver of change from coal-based blast furnaces to electric arc furnaces. Nippon Steel — Japan’s largest steelmaker — exemplifies this. Organizations such as Australasian Centre for Corporate Responsibility (ACCR) and Transition Asia have sustained pressure through investor dialogue, company analysis, and shareholder advocacy. In parallel, campaigners like SteelWatch have amplified public scrutiny. While progress has not been linear, the investment decisions announced in spring 2025 demonstrate that strategic, long-term engagement can deliver results.
Sowing the seeds of change
The green steel transition will not happen overnight — nor in isolation. It demands collaboration, evidence, and persistence — along with the ability to detect early signals of change. The work we support helps lay the foundation for this transformation, whose effects may extend far into the future.
Hero picture: Pixabay.
Iina Heikkilä is TAH Foundation’s environmental specialist and responsible for evaluating the impact of the foundation’s projects.
