The United Nations Environment Programme asserts that greenhouse gas emissions must decline by 45 percent from 2010 levels by 2030 to limit global warming to 1.5 degrees Celsius.1 Public policy will play an important role in keeping emissions within these bounds.
However, even with the recent passage of the Inflation Reduction Act, critical gaps remain between its anticipated 40 percent reduction in emissions by 2030 and the 50 percent reduction promised in the U.S. nationally determined contribution to the Paris Agreement. 2 Companies have an important role to play in encouraging and enabling policymakers to close these gaps. Corporate lobbying inconsistent with the Paris Agreement presents increasingly material risks to investors, including systemic risks to our financial systems, as delays in emissions reductions increase the compounding physical risks of climate change, threaten economic stability, and heighten uncertainty and volatility in investment portfolios.
Of particular concern are trade associations and other politically active organizations that too often lobby aggressively against forward-looking regulations and legislation addressing the climate crisis.
As long-term shareholders, we commend United Parcel Service (“UPS”) for setting a Paris aligned Net Zero emissions goal and taking steps to implement it. As part of this plan, UPS should carefully evaluate whether its public policy advocacy advances or undercuts the goals of the Paris Agreement. Numerous companies in both the U.S. and Europe have produced or agreed to issue reports evaluating the Paris alignment of their lobbying programs in the past two years.
UPS does not provide sufficient information to help investors understand if or how UPS ensures that its lobbying activities, directly, in the company’s name, and indirectly, through membership organizations and trade associations, align with the Paris Agreement’s net-zero goals, and how management and the board address any misalignments in overall policies or specific lobbying activities. UPS has disclosed some information about the climate positions of its trade associations in its response to the annual CDP questionnaire but has yet to undertake a review of any misalignments with its own net-zero goals or the goals of the Paris Agreement. This disclosure does not include analysis of specific positions taken by trade association or other organizations. For example, UPS is a known supporter and funder of the American Legislative Exchange Council, which actively advances campaigns against positive climate policy.