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Lower-carbon steel

Oxymoron or investment opportunity?

29 January 2026

Articles

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The article frames the steel sector’s role in the energy transition, combining ESG and financial analysis to show why this topic matters for investors today. It explores the compelling value of lower carbon steel and examines the robust investment potential in companies at the forefront of its production.

Key Insights:

Green Premium:
Our analysis indicates that steel producers supplying to EU and US markets can achieve up to a 15 per cent increase in profit margins by selling lower carbon steel. This figure is conservatively estimated and could increase substantially over the next decade, as the EU’s Carbon Border Adjustment Mechanism (CBAM) and broader economic decarbonisation initiatives gain traction
ESG Leadership:
We provide a detailed assessment of ESG risk profiles, contrasting a steel sector laggard with a leader. Notably, the steel leader, when it abandoned its acquisition of a high-carbon steel plant and refocused its strategy on lower carbon steel, outperformed its peers by 40 per cent in the 3-month period following the acquisition abandonment announcement
Financial Performance:
Coincidently, over the past four years, driven by several factors, mid to large-cap steel companies with superior ESG ratings have lower carbon emissions and have outperformed their lower ESG-rated counterparts by approximately 30 per cent during the same period

Read the full analysis that underscores the growing strategic and financial advantages for investors considering exposure to lower carbon steel producers.

This document is for marketing purposes and does not constitute independent investment research, investment advice nor a recommendation to any reader of this content to buy or sell investments. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.
The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested.
Past performance does not predict future returns.
Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Asset Management accepts no liability for any failure to meet such forecast, projection or target